Pashley, Mary M.; Krishnaswamy, C.R.; Gilbert, Erika W. - In: Journal of Business Finance & Accounting 24 (1997-01) 1, pp. 85-96
The cost of bond covenants restricting the dispositions of assets are examined in this study. Using an option pricing framework, it is shown that the cost of compliance could be high if restrictions are placed on the sale of common stock holdings. Similar results can be obtained by using a...