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Annual Conference

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Accounting

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May 2016

Does fiduciary duty to creditors reduce debt covenant violation avoidance behavior?

Shai LEVI, Benjamin SEGAL, Dan SEGAL
Financial reports should provide useful information to shareholders and creditors. Directors, however, normally owe fiduciary duties to equity holders and not creditors. We examine whether this slant in fiduciary duties affects the extent to which firms use financial engineering to circumvent debt c...
Keywords: Debt Structuring, Director Fiduciary Duties, Board Independence
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