Debt Covenants of Finnish Companies and Their Reporting in Financial Statement

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dc.contributor Aalto University en
dc.contributor Aalto-yliopisto fi
dc.contributor.advisor Melgin, Jari
dc.contributor.author Bouyahia, Alex
dc.date.accessioned 2018-03-28T12:38:03Z
dc.date.available 2018-03-28T12:38:03Z
dc.date.issued 2017
dc.identifier.uri https://aaltodoc.aalto.fi/handle/123456789/30353
dc.description.abstract This study examines what covenants are used in Finnish companies, the reporting of covenants in financial statement and what characters can be found in companies with capital, performance or both types of covenants. The study is based on a sample of 30 Finnish companies which represent 27 percent of non-financial companies in stock market of Helsinki (OMX Helsinki). The financial figures and information of covenants are from financial statements and Orbis database. The results show that 70 percent of the companies in the data reported covenants in financial statement. The most common ones were equity ratio, net debt to EBITDA and net gearing which are financial covenants. The use of negative and positive covenants was modest of which negative covenants were more common. I used eight different variables that measured performance, leverage, size, risk and the largest shareholder to explain the characters of companies with capital and performance covenants and to explain covenant reporting quality. The results suggest that larger and big middle-sized companies have more probably only capital covenants, while companies that have higher amount of interest- bearing debt and a smooth performance during the years may have more likely only performance covenants. In the sample, only small companies with a poorer performance on average, had both capital and performance covenants at the same time. The results show also that companies with good performances and strong balance sheets are either reporting covenants with superior quality or not reporting covenants at all. Companies that did not report covenants at all had also a much higher market value in relation to assets on average whereas companies that reported with superior quality are having more probably the government or an insurance company as the largest owner. Companies with high levels of leverage ratios and low level of equity ratio reported covenants more probably but without superior quality, which may affect the decision making of stakeholders. en
dc.format.extent 35
dc.format.mimetype application/pdf en
dc.language.iso en en
dc.title Debt Covenants of Finnish Companies and Their Reporting in Financial Statement en
dc.type G1 Kandidaatintyö fi
dc.contributor.school Kauppakorkeakoulu fi
dc.contributor.school School of Business en
dc.contributor.department Laskentatoimen laitos fi
dc.subject.keyword financial covenant en
dc.subject.keyword capital covenant en
dc.subject.keyword performance covenant en
dc.subject.keyword leverage en
dc.subject.keyword agency cost en
dc.subject.keyword corporate governance en
dc.subject.keyword monitoring en
dc.subject.keyword violation en
dc.subject.keyword interest-bearing debt en
dc.subject.keyword stakeholder en
dc.subject.keyword financial reporting en
dc.subject.keyword trade-off en
dc.identifier.urn URN:NBN:fi:aalto-201803281820
dc.type.ontasot Bachelor's thesis en
dc.type.ontasot Kandidaatintyö fi
dc.programme Laskentatoimi fi


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