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Creditor control rights and board independence

Ferreira, Daniel, Ferreira, Miguel A. and Mariano, Beatriz (2018) Creditor control rights and board independence. Journal of Finance, 73 (5). pp. 2385-2423. ISSN 0022-1082

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Pending embargo until 1 January 2100.

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Identification Number: 10.1111/jofi.12692


We find that the number of independent directors on corporate boards increases by approximately 24% following financial covenant violations in credit agreements. Most of these new directors have links to creditors. Firms that appoint new directors after violations are more likely to issue new equity, and to decrease payout, operational risk and CEO cash compensation than firms without such appointments. We conclude that a firm’s board composition, governance, and policies are shaped by current and past credit agreements.

Item Type: Article
Official URL:
Additional Information: © 2017 The Authors
Divisions: Finance
Subjects: H Social Sciences > HG Finance
Sets: Departments > Finance
Date Deposited: 05 Oct 2017 08:29
Last Modified: 20 Feb 2019 06:39

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