Date of this Version
Journal of Accounting and Economics
Considerable research has documented the role of debt covenants and conservative financial accounting in addressing agency conflicts between lenders and borrowers. Beatty, A., Weber, J., and Yu, J. [2008. Conservatism and debt. Journal of Accounting and Economics, forthcoming] document interesting, but mixed, findings on the relation between debt covenants and conservative accounting, and the extent to which the two contracting mechanisms act as substitutes or complements. In this paper, I discuss the economic roles of financial reporting, debt covenants, and conservatism within the debt contracting environment, and attempt to fit BWY's findings within this context.
© 2008. This manuscript version is made available under the CC-BY-NC-ND 4.0 license http://creativecommons.org/licenses/by-nc-nd/4.0/
financial reporting, conservatism, debt contracts, debt covenants, agency costs of debt
Guay, W. R. (2008). Conservative Financial Reporting, Debt Covenants, and the Agency Costs of Debt. Journal of Accounting and Economics, 45 (2-3), 175-180. http://dx.doi.org/10.1016/j.jacceco.2008.05.001
Date Posted: 27 November 2017
This document has been peer reviewed.