Does fiduciary duty to creditors reduce debt covenant violation avoidance behavior?
研究发现，当法院判决要求董事对债权人承担信义义务后，企业使用金融工程规避债务契约违约的行为显著减少，且董事会质量仅在董事负有该义务时才能降低此类规避行为。
Abstract Financial reports should provide useful information to shareholders and creditors. Directors, however, normally owe fiduciary duties to equity holders and not creditors. We examine whether this slant in fiduciary duties affects the extent to which firms use financial engineering to circumvent debt covenant violation. By avoiding debt covenant violation, firms prevent creditors from taking actions to reduce bankruptcy risk and recover their investment, and allow the firm to continue operating for the benefit of equity holders. We find that a Delaware court ruling that imposed fiduciary duties toward creditors led to a decrease in financial engineering and debt covenant avoidance in Delaware firms. We also show that board quality lowers financial engineering and debt covenant avoidance by firms only when their directors owe a legal fiduciary duty to creditors. Collectively, our results suggest that unless directors are required to protect creditors’ interest, they are likely to take actions to circumvent debt covenant violations.