Assistant Professor of Accounting Jared Jennings presented research focusing on management forecasting in debt contract negotiations to a corporate audience as part of Olin’s Business Research Series, Jan. 27 in Bauer Hall.
Previous research in this area has focused on the monitoring role of historical information in debt contracting. Jennings’ research focuses on the use of information obtained during the screening process prior to a loan contract’s inception. The researchers analyzed management forecasts and their accuracy to measure the borrower’s ability to anticipate and respond to future economic conditions.
The researchers found that there was an almost 12% reduction in the initial debt contract spread between borrowers with the least and most accurate management forecasts.
Olin’s Business Research Series, features recent faculty research including annual winners of the Olin Award. Faculty presentations throughout the year and executive summaries published on the Olin website aim to translate noted academic papers into nuggets of valuable information that managers can apply in today’s competitive global marketplace.
Jenning’s presentation included research published in his paper, “Are better forecasters better borrowers? Management forecast accuracy and the cost of debt.” The paper was a top contender in the 2015 Olin Award competition that honors research that impacts business.
Contact and learn more about Professor Jennings here.
The Olin Award and Business Research Series are sponsored by Richard J. Mahoney, Olin Distinguished Executive in Residence and former chairman and CEO of Monsanto.
Link to Olin faculty research here.