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The excluded covenants often are those that use accounting performance measures. Although much research has focused on the potential benefits of accounting as a basis for debt contracting, little is known about settings where it may be optimal to exclude accounting performance statistics from public debt contracts. We find that cov-lite high-yield bonds have a higher trading turnover and lower yield spreads. Our findings provide empirical support for theory, which predicts, for optimal bond covenant design, that a trade-off between improving trading ease versus enhanced investor protection needs to be managed. These results enhance our understanding of the limits of accounting\u2019s role in (bond) contracting design. <\/jats:p>","DOI":"10.1177\/0148558x20987384","type":"journal-article","created":{"date-parts":[[2021,1,23]],"date-time":"2021-01-23T11:06:15Z","timestamp":1611399975000},"page":"483-509","update-policy":"https:\/\/doi.org\/10.1177\/sage-journals-update-policy","source":"Crossref","is-referenced-by-count":2,"title":["The Rise of Covenant-Lite Bond Contracting"],"prefix":"10.1177","volume":"38","author":[{"ORCID":"https:\/\/orcid.org\/0000-0002-5101-9583","authenticated-orcid":false,"given":"Miles","family":"Gietzmann","sequence":"first","affiliation":[{"name":"University of Bocconi, Milano, Italy"}]},{"ORCID":"https:\/\/orcid.org\/0000-0001-6030-7264","authenticated-orcid":false,"given":"Helena","family":"Isidro","sequence":"additional","affiliation":[{"name":"Instituto Universit\u00e1rio de Lisboa, Lisbon, Portugal. Business Research Unit (BRU-IUL)"}]},{"given":"Ivana","family":"Raonic","sequence":"additional","affiliation":[{"name":"Cass Business School, London, UK"}]}],"member":"179","published-online":{"date-parts":[[2021,1,23]]},"reference":[{"key":"bibr1-0148558X20987384","unstructured":"Aneiro M. (2012, July 31). More investors favoring leveraged loans over junk bonds. Barron\u2019s. https:\/\/www.barrons.com\/articles\/BL-INCOMB-1298"},{"key":"bibr2-0148558X20987384","doi-asserted-by":"publisher","DOI":"10.1016\/j.jacceco.2010.10.001"},{"key":"bibr3-0148558X20987384","doi-asserted-by":"publisher","DOI":"10.4337\/9781849808972.00013"},{"key":"bibr4-0148558X20987384","unstructured":"Bahceli Y. (2018, February 26). More high-yield-lite deals expected. 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V., Boury P. M. (2015, June 16). The resurgence of covenant lite, and what it means for the restructuring market. 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