Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/27835
Authors: 
Heidorn, Thomas
Jaster, Oliver
Willeitner, Ulrich
Year of Publication: 
2001
Series/Report no.: 
Arbeitsberichte der Hochschule für Bankwirtschaft 30
Abstract: 
Merger and acquisition activities can have a strong impact on the capital structure of the companies involved and therefore on the value of debt. This paper discusses the role of covenants within debt contracts. Using the Real Option approach to quantify the implications of covenants on the value of the company, it can be shown that covenants do not necessarily reduce the risk of debt lender. The value of the company is determined by assets in place and management decisions in the future. Any limitation of the management might reduce the value of the company and therefore the value of debt.
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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