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Jurnal

Journal of Banking and Finance

Keyword

• Renegotiation; • Financial contracts; • Bank loans; • Certification; • Shareholder value; • Event studies; • Europe

Pengarang

C.J. Godlewski

Subject

  1. BANKING
  2. FINANCE

    [Abstrak]

    By using a sample of bank loan renegotiations by European firms, I show that the renegotiation of financial contracts bears a certification value, while deeply changing the contractual features of the loan over time, to the benefit of shareholders. I find that amendments to financial covenants and to loan amounts increase the cumulative abnormal returns of a borrowing firm by 10–15%. Early and less frequent renegotiations of bilateral loans with short maturities also imply a positive stock market reaction. Amendments signaling the early accrual of new and positive information allow increasing firm value.

    Periode

    Vol 53, Tahun 2015

    [Berkas]

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