Research | Huang Kanyuan: Amendment Thresholds and Voting Rules in Debt Contracts
In the syndicated loan market, the Required Lenders clause is a vital provision of loan covenants. Most loan contracts explicitly specify voting rules for waiving covenant defaults. However, for a long time, academia has mostly focused on the frequency and economic consequences of covenant defaults, while ignoring the voting rules that support waiver decisions themselves.
The study Amendment Thresholds and Voting Rules in Debt Contracts, co-authored by Professor Huang Kanyuan of the School of Management and Economics (SME), The Chinese University of Hong Kong, Shenzhen (CUHK-Shenzhen), Professor Judson Caskey of Purdue University, and Professor Daniel Saavedra of the UCLA Anderson School of Management, explores the design motivations for amendment thresholds and voting rules in syndicated loan contracts. Focused on optimal voting rules that allow lenders to waive covenant defaults, the study investigates the determinants and economic functions of voting rules in loan contracts through theoretical modeling and empirical data, filling a gap in the literature.
The research paper was officially published online in the Journal of Accounting Research, a top-tier international accounting journal.
About the Author
Huang Kanyuan
Assistant Professor
SME, CUHK-Shenzhen
Research Field
Information Disclosure, Equity Analysts, and Debt Contracting and Entrepreneurship
Co-authors
Judson Caskey
Purdue University
Daniel Saavedra
UCLA Anderson School of Management
