| Journal: | BAR - Brazilian Administration Review |
| Database: | |
| System number: | 000552891 |
| ISSN: | 1807-7692 |
| Authors: | Silva, Vinícius Augusto Brunassi1 Saito, Richard1 Barbi, Fernando Carvalhaes2 |
| Institutions: | 1Fundação Getúlio Vargas, EAESP, São Paulo, SP. Brasil 2Fundação Getúlio Vargas, EESP, São Paulo, SP. Brasil |
| Year: | 2013 |
| Season: | Jul-Sep |
| Volumen: | 10 |
| Number: | 3 |
| Pages: | 323-346 |
| Country: | Brasil |
| Language: | Inglés |
| English abstract | This paper examines the role of financial covenants as substitutes for short-term debt and a possible trade off between short-term debt and long-term debt, especially for companies with growth opportunities. Using a sample of 159 corporate bonds issued on the Brazilian Market, we found evidence that: first, financial covenants and short-term debt are substitute tools to minimize agency conflict, as per literature confirming that stronger financial covenants could limit the possible expropriation of debt holders and in exchange debt holders may be willing to lend at longer terms and; second, companies with growth opportunities are willing to exchange short-term debt for long-term debt under the presence of covenants. Most importantly, this does not seem to be a restriction for financing growth opportunities. |
| Keyword: | Covenants, Agency conflict, Short-term debt, Growth opportunities and leverage |
| Full text: | Texto completo (Ver HTML) Texto completo (Ver PDF) |
