Discussion of “Borrower private information covenants and loan contract monitoring”

Valeri V. Nikolaev

Journal of Accounting and Economics, 2017, vol. 64, issue 2, 340-345

Abstract: Carrizosa and Ryan (2017) explore the use of private information covenants, which contractually oblige borrowers to disclose projected and intra-quarter financial statements. The authors provide evidence that creditors acquire private information about borrowers via these covenants. This facilitates the monitoring process, subject to a cost-benefit tradeoff. I discuss how the study fits into the literature and contend that the costs associated with information covenants are less clear and have yet to be established. I discuss complementary information mechanisms and raise several research design issues. I also argue that the study sheds light on an open question in the disclosure literature.

Keywords: Monitoring, disclosure; Information covenants; Reporting frequency; Contracting on accounting information (search for similar items in EconPapers)
JEL-codes: D80 G14 G21 G30 M40 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jaecon:v:64:y:2017:i:2:p:340-345

DOI: 10.1016/j.jacceco.2017.08.002

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