The market response to implied debt covenant violations
Public Deposited- Last Modified
- March 22, 2019
- Creator
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Stice, Derrald Earl, II
- Affiliation: Kenan-Flagler Business School
- Abstract
- Previous research documents a negative stock price reaction to the announcement of debt covenant violations. I find evidence that investors price the likelihood of an earnings-based debt covenant violation on the date firms report earnings. Furthermore, I find no evidence of a negative stock price reaction to the announcement of an actual debt covenant violation when there was high likelihood of such a violation implied by previous reported earnings. My results suggest that the cost of debt covenant violations in the cross-section is higher than estimated in the previous literature.
- Date of publication
- May 2011
- DOI
- Resource type
- Rights statement
- In Copyright
- Note
- "... in partial fulfillment of the requirements for the degree of Doctor of Philosophy in the Kenan-Flagler School of Business."
- Advisor
- Abarbanell, Jeffery
- Degree granting institution
- University of North Carolina at Chapel Hill
- Language
- Publisher
- Place of publication
- Chapel Hill, NC
- Access right
- Open access
- Date uploaded
- March 18, 2013
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