The role of bank monitoring in borrowers׳ discretionary disclosure: Evidence from covenant violations

Rahul Vashishtha

Journal of Accounting and Economics, 2014, vol. 57, issue 2, 176-195

Abstract: This study uses covenant violations to provide evidence on how firms make disclosure decisions in the presence of enhanced bank monitoring. Using a regression discontinuity design, I find that firms reduce disclosure following covenant violations. A series of analyses suggest that part of this decline in disclosure reflects a delegation of monitoring to banks by shareholders who consequently demand less disclosure.

Keywords: Disclosure; Banks; Corporate governance; Covenant violation; Control rights (search for similar items in EconPapers)
JEL-codes: D82 G21 G32 M40 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (31)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jaecon:v:57:y:2014:i:2:p:176-195

DOI: 10.1016/j.jacceco.2014.04.002

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