Utilisation and restrictiveness of covenants in Australian private debt contracts

Cotter, Julie (1998) Utilisation and restrictiveness of covenants in Australian private debt contracts. Accounting and Finance, 38 (2). pp. 181-196. ISSN 0810-5391

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Abstract

This paper investigates the accounting based covenants typically contained in the private debt contracts of listed Australian firms. In particular, cross sectional determinants of variation in covenant utilisation and restrictiveness are investigated. The primary source of data presented in the paper is a questionnaire completed by senior corporate managers of banks lending to listed Australian firms. In addition, standard and actual bank loan agreements are analysed. The survey results indicate that there is considerable cross-sectional variation in the utilisation and restrictiveness of covenants included in Australian private debt contracts, with this variation being partially explained by firm size and industry membership. The covenants most likely to be included are leverage, interest coverage, current, and prior charges ratios.


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Item Type: Article (Commonwealth Reporting Category C)
Refereed: Yes
Item Status: Live Archive
Additional Information: Author's version deposited in accordance with the copyright policy of the publisher. © Julie Cotter (1998) This is the author's version of the work. It is posted here by permission of the author for personal use, not for redistribution. The definitive version was published in Accounting and Finance, 38 (2). pp. 181-196.
Depositing User: Prof. Julie Cotter
Faculty / Department / School: Historic - Faculty of Business - Department of Accounting
Date Deposited: 11 Oct 2007 01:09
Last Modified: 02 Jul 2013 22:45
Uncontrolled Keywords: debt covenants; restrictiveness; bank loan agreements
Fields of Research (FOR2008): 15 Commerce, Management, Tourism and Services > 1502 Banking, Finance and Investment > 150203 Financial Institutions (incl. Banking)
15 Commerce, Management, Tourism and Services > 1501 Accounting, Auditing and Accountability > 150102 Auditing and Accountability
18 Law and Legal Studies > 1801 Law > 180105 Commercial and Contract Law
Socio-Economic Objective (SEO2008): B Economic Development > 90 Commercial Services and Tourism > 9001 Financial Services > 900199 Financial Services not elsewhere classified
Identification Number or DOI: doi: 10.1111/1467-629X.00009
URI: http://eprints.usq.edu.au/id/eprint/2539

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