会计学院brownbag seminar预告

时间：2020.12.22（星期二） 11:00-12:30

地点：通博楼D301

报告人：屠致远

报告题目：Why Do Firms Withhold Loan Contract Details?An Incomplete Contracting Explanation

摘要：Theory suggests that greater information asymmetry between firms and lenders entails allocating stronger decision rights to the latter through tighter covenants. While tighter covenants could be more likely violated, they are often relaxed later, upon contract renegotiation. We hypothesize that in such an incomplete contracting framework, greater information asymmetry gives firms more incentives to withhold information about the initial covenants from the public, to avoid overstating contractual constraints and preclude harmful reactions to violations that may be cured via renegotiations. We find evidence consistent with this hypothesis. Our findings are stronger when contracts likely contain more performance covenants to facilitate more frequent decision right transfers to lenders. Our inferences are robust to controlling for firms’ obligation to disclose (i.e., contract materiality), proprietary costs, and future performance. While prior research has long recognized that the details of a significant portion of loan contracts are not publicly available, we are the first to provide an explanation from the incomplete contracting perspective.