Bond Covenants and the Cost of Debt: Evidence from China

作者：Gong, Guangming; Xu, Si^*; Gong, Xun

来源：Emerging Markets Finance and Trade, 2017, 53(3): 587-610.

DOI：10.1080/1540496X.2015.1095568

• accounting quality
• agency conflicts
• bond covenants
• bond yield spread

We examine how the use of covenants in the bond contract affects the cost of debt by using a sample of Chinese firms. We find that (1) the use of financing-related and asset-sale covenants is negatively associated with the cost of debt; (2) the negative relations between financing-related and asset-sale covenants and the cost of debt are more pronounced when a firm's agency conflict is severe or accounting quality is high; (3) the negative relations between financing-related and asset-sale covenants and the cost of debt are significantly intensified if the issuer is a state-owned enterprise (SOE).

• 出版日期2017
• 单位湖南大学