Financial covenants and financial reporting conservatism: French evidence

  • Authors

    • Raja Hached faculté des sciences économiques et de gestion SFAX
  • We examine the relation between the use of financial covenants in private debt contract and financial reporting conservatism for a sample of French firms. More specifically, we seek to know if the existence of financial covenants on private debt contracts leads managers to exhibit more timely loss recognition. Using a sample of 488 French firms operating in various sector during the period going from 2003 to 2009, we found that the reliance on financial covenants in private lending agreements is positively associated with the demand of timely loss recognition.

    Keywords: Accouting Conservatism, Agency Problems, Accounting Quality. Financial Covenants, Private Debt Contracts.

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  • How to Cite

    Hached, R. (2014). Financial covenants and financial reporting conservatism: French evidence. International Journal of Basic and Applied Sciences, 3(3), 245-253.