Waiving Technical Default: The Role of Agency Costs and Bank Regulations
研究银行和借款人特征如何影响银行放弃债务契约违约的决定，发现银行利用私有信息做出决策，且该决策与代理成本、债务特征、银行特征及监管环境相关。
Abstract: This paper examines whether the characteristics of banks and borrowers are associated with banks' decisions to waive violations of debt covenants. The findings suggest that banks possess sufficient private information about firms, and they use this information in their waiver decisions. Banks' decisions to waive violations vary with the borrowers' agency costs, debt features, the banks' characteristics and regulatory circumstances, and the bank‐firm business relationship. There is no evidence that syndicated loans, bank structure, and adverse economic conditions are significant determinants of the waiver decision. Research findings offer valuable insight into the theoretical and practical implications of debt covenants and agency costs.