RDP 2022-05: The Real Effects of Debt Covenants: Evidence from Australia Appendix D: Direct Effects – Robustness Checks

Kim Nguyen

October 2022

Table D1: Direct Effects of Debt Covenants – Non-mining Sample
Overall and across different channels
  Equation (1)
Overall ( β 0 ) 		Equation (2)
Ex ante ( β 1 ) 		Equation (3)
Ex post ( β 2 )
Investment –0.128***
(0.037)		 –0.134**
(0.054)		 0.033
(0.135)
Observations 5,409 2,871 1,086
Staff expenses –0.072***
(0.025)		 –0.094*
(0.050)		 0.105*
(0.060)
Observations 3,901 2,009 823
Firm fixed effects Yes Yes Yes
Financial measures Yes Yes Yes
Sector time trends Yes Yes Yes

Notes: Clustered standard errors at firm level are shown in parentheses. ***, ** and * denote statistical significance at the 1, 5 and 10 per cent levels, respectively.

Sources: Author's calculations; Connect4; Morningstar
Table D2: Direct Effects of Debt Covenants – Large Firms Sample
Overall and across different channels
  Equation (1)
Overall ( β 0 ) 		Equation (2)
Ex ante ( β 1 ) 		Equation (3)
Ex post ( β 2 )
Investment −0.111***
(0.033)		 −0.102**
(0.051)		 −0.006
(0.140)
Observations 4,499 2,344 1,086
Staff expenses −0.066***
(0.024)		 −0.078
(0.053)		 0.100*
(0.054)
Observations 3,186 1,603 817
Firm fixed effects Yes Yes Yes
Financial measures Yes Yes Yes
Sector time trends Yes Yes Yes

Notes: Clustered standard errors at firm level are shown in parentheses. ***, ** and * denote statistical significance at the 1, 5 and 10 per cent levels, respectively.

Sources: Author's calculations; Connect4; Morningstar
Table D3: Direct Effects of Debt Covenants – Sample with Firms Never Exposed Removed
Overall and across different channels
  Equation (1)
Overall ( β 0 ) 		Equation (2)
Ex ante ( β 1 ) 		Equation (3)
Ex post ( β 2 )
Investment −0.206***
(0.060)		 −0.163**
(0.075)		 −0.126
(0.153)
Observations 1,978 472 1,040
Staff expenses −0.103**
(0.041)		 −0.056
(0.071)		 0.105**
(0.046)
Observations 1,479 330 786
Firm fixed effects Yes Yes Yes
Financial measures Yes Yes Yes
Sector time trends Yes Yes Yes

Notes: Clustered standard errors at firm level are shown in parentheses. ***, ** and * denote statistical significance at the 1, 5 and 10 per cent levels, respectively.

Sources: Author's calculations; Connect4; Morningstar