Financial reports should provide useful information to shareholders and creditors. Directors, however, normally owe fiduciary duties to equity holders and not creditors. We examine whether this slant in fiduciary duties affects the extent to which firms use financial engineering to circumvent debt covenant violation. By avoiding debt covenant violation, firms prevent creditors from taking actions to reduce bankruptcy risk and recover their investment, and allow the firm to continue operating for the benefit of equity holders. We find that a Delaware court ruling that imposed fiduciary duties toward creditors led to a decrease in financial engineering and debt covenant avoidance in Delaware firms. We also show that board quality lowers financial engineering and debt covenant avoidance by firms only when their directors owe a legal fiduciary duty to creditors. Collectively, our results suggest that unless directors are required to protect creditors’ interest, they are likely to take actions to circumvent debt covenant violations.

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对债权人的受信义务是否会减少违反债务契约的回避行为？

财务报告应为股东和债权人提供有用的信息。然而，董事通常对股权持有人而非债权人负有信托义务。我们研究了信托责任的这种倾向是否会影响公司使用金融工程来规避违反债务契约的程度。通过避免违反债务契约，公司可以防止债权人采取行动来降低破产风险和收回投资，并允许公司为股东的利益继续经营。我们发现，特拉华州法院对债权人施加信托义务的裁决导致特拉华州公司的金融工程和债务契约规避减少。我们还表明，只有当公司的董事对债权人负有合法的信托义务时，董事会质量才会降低公司的金融工程和债务契约规避。总的来说，我们的结果表明，除非要求董事保护债权人的利益，否则他们很可能会采取行动来规避违反债务契约的行为。