Journal article
Loan-commitment borrowing and performance-sensitive debt
Abstract
This paper examines a firm’s investment/financing decision when it uses loan-commitment-type debt with performance-sensitivity features. This analysis is of interest because most corporate borrowing today is by means of private debt, which tends to be of the loan-commitment type as well as contain performance-sensitivity provisions. We show that, except for the case of low leverage ratio, performance-sensitive debt makes shareholders better off …
Authors
Sarkar S; Zhang C
Journal
Review of Quantitative Finance and Accounting, Vol. 47, No. 4, pp. 973–986
Publisher
Springer Nature
Publication Date
November 2016
DOI
10.1007/s11156-015-0527-z
ISSN
0924-865X