The use of debt covenants in public debt: The role of accounting quality and reputation

@inproceedings{Begley2005TheUO,
  title={The use of debt covenants in public debt: The role of accounting quality and reputation},
  author={Joy Begley and Sandra L. Chamberlain},
  year={2005}
}
The use of accounting numbers in lending agreements is considered to be an importantpart of the demand for accounting. The accounting choice literature hypothesizes that managersmake accounting choices, such as manipulating net income, to avoid tripping accounting-basedloan covenants. Much of this body of research presumes that debt covenants are frequently usedand that the form of the covenants is standard boiler-plate. However, recent research by Begleyand Freedman [2004] calls into question… CONTINUE READING