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حسابداری و مالی::
عملکرد تعهدی
Abstract: Using a sample of firms that disclose the realizations of earnings used for determining covenant compliance in loan contracts, we provide direct evidence on the informational properties of earnings used in the performance covenants included in debt contracts.
We find that the earnings measure used in performance covenants does not exhibit asymmetric loss timeliness and has significantly greater cash flow predictive ability than GAAP measures of earnings.
We suggest that these results reflect the idea that contracting parties design accounting rules for performance covenants to enhance their efficacy as ―tripwires‖.
In this study, we identify a sample of firms that disclose performance covenant earnings realizations, as defined in their debt contracts, and examine the properties of these earnings measures.
We directly examine the extent of conservatism and cash flow predictive ability of earnings used in performance covenants of private debt contracts.
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