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dc.contributor.advisorJoseph Weber.en_US
dc.contributor.authorSaavedra Lux, Daniel Andresen_US
dc.contributor.otherSloan School of Management.en_US
dc.date.accessioned2017-01-30T19:16:39Z
dc.date.available2017-01-30T19:16:39Z
dc.date.copyright2015en_US
dc.date.issued2015en_US
dc.identifier.urihttp://hdl.handle.net/1721.1/106750
dc.descriptionThesis: Ph. D., Massachusetts Institute of Technology, Sloan School of Management, 2015.en_US
dc.descriptionCataloged from PDF version of thesis.en_US
dc.descriptionIncludes bibliographical references (pages 44-49).en_US
dc.description.abstractI investigate whether and how expected future contract renegotiation considerations affect the type of covenants used in ex-ante debt contracts. I find that when future contract renegotiation costs are expected to be high, debt contracts are less likely to include covenants that restrict the borrower's financial flexibility in good states. This finding suggests that when renegotiation costs are high, borrowers and lenders avoid the use of covenants that are more likely to hold up the borrower and force it to bypass value-enhancing corporate policies (e.g., investments). Consistent with this interpretation, the negative relationship between renegotiation costs and the presence of flexibility-reducing covenants becomes stronger when the borrower has fewer outside options and financial flexibility becomes more valuable. Finally, I find that when future renegotiation costs are expected to be high, debt contracts have more covenants that are directly linked to the current performance of the borrower, which allows for a more efficient allocation of decision rights between the borrower and lenders. Overall, this study provides initial evidence about how renegotiation considerations affect the design of covenant packages in debt contracts.en_US
dc.description.statementofresponsibilityby Daniel Andres Saavedra Lux.en_US
dc.format.extent3, 68 pagesen_US
dc.language.isoengen_US
dc.publisherMassachusetts Institute of Technologyen_US
dc.rightsMIT theses are protected by copyright. They may be viewed, downloaded, or printed from this source but further reproduction or distribution in any format is prohibited without written permission.en_US
dc.rights.urihttp://dspace.mit.edu/handle/1721.1/7582en_US
dc.subjectSloan School of Management.en_US
dc.titleRenegotiation and the choice of covenants in debt contractsen_US
dc.typeThesisen_US
dc.description.degreePh. D.en_US
dc.contributor.departmentSloan School of Management.en_US
dc.identifier.oclc969447918en_US


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