Accounting information and the structure of corporate debt covenants



Título de la revista

ISSN de la revista

Título del volumen


Universidad EAFIT
Universidad Carlos III de Madrid


In this End of Mater Project, we analyse the most relevant empirical and theoretical papers and main ideas behind them -- Following academic work made us understand what is the role of accounting information in the improvement of debt contracting and how it achieved this, among different mechanisms -- Here we are focusing our attention on two different theories, The Agency theory and The Incomplete contract theory -- We consider really important the differences between two of them and how they, together, influence contract making -- Furthermore, we base our analysis on different type of covenants included in both theories, as well as on the impact of accounting conservatism to risk reduction or at least risk perception -- Finally, we explain importance of existence of renegotiation process both, ex-post and ex-ante -- All this in order to understand how debt covenants are made, why lenders rely on them and why in different case scenarios they play completely different role


Palabras clave

Información financiera, Teoría de la agencia, Teoría de los contratos incompletos, Conservadurismo, Contratos de deuda