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حسابداری و مالی::
نقد شوندگی
An examination of the relevant disclosure rules (see Section 2) suggests that our sample is likely to contain firms for which performance covenants are a material term in their debt contracts and the violation of these covenants could materially affect the firms' liquidity.
This is consistent with Christensen and Nikolaev (2012) who argue that capital covenants (as opposed to performance covenants) are designed to ensure that a minimum amount of equity capital is retained inside the firm and conservative accounting may facilitate this role by providing lower bound estimates of firms' liquidation value (Watts, 2003a,b).
The SEC promulgated the relevant rules governing firms' disclosures about their liquidity situation in December 2003 when they provided guidance on the preparation of the Management Discussion and Analysis (MD&A) section of the 10-K financial
report.7 One element of this regulation is related to the disclosures firms make regarding their liquidity.
―if management believes that the credit agreement is a material agreement, that the covenant is a material term of the credit agreement and that information about the covenant is material to an investor's understanding of the company's financial condition and/or liquidity, then the company may be required to disclose the measure as calculated by the debt covenant as part of its MD&A.
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