GAAP provisions in loan contracts specify how to address the effect of accounting changes on financial covenants. I document a pronounced upward trend in and the dominance of frozen-on-request (FOR) GAAP provisions, which incorporate accounting changes unless either the borrower or the lender requests a freeze. FOR GAAP streamlines the process of incorporating accounting changes into covenant calculations by obviating the need for renegotiations and prevents opportunistic GAAP freezes by requiring good faith renegotiations. Therefore, FOR GAAP is more likely to incorporate accounting changes beneficial to covenant informativeness, leading to lower false positives (i.e., Type I errors of financial covenant violations) and false negatives (i.e., Type II errors of financial covenant violations). Based on a large sample of loan contracts, I find that FOR GAAP decreases false positives and false negatives after controlling for self-selection bias and that the decrease is more pronounced when accounting changes relevant to financial covenants are more significant. My study provides new evidence of the role accounting standards and GAAP provisions play in debt contracting efficiency.

中文翻译：

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会计变更和违反契约错误的处理

贷款合同中的公认会计准则条款规定了如何解决会计变更对财务契约的影响。我记录了按请求冻结 (FOR) 公认会计准则条款的明显上升趋势和主导地位，其中包含会计变更，除非借款人或贷方请求冻结。 FOR GAAP 通过消除重新谈判的需要，简化了将会计变更纳入契约计算的过程，并通过要求善意重新谈判来防止机会主义的 GAAP 冻结。因此，FOR GAAP 更有可能纳入有利于契约信息性的会计变更，从而降低误报（即违反财务契约的第一类错误）和误报（即违反财务契约的第二类错误）。基于大量贷款合同样本，我发现在控制自我选择偏差后，FOR GAAP 减少了误报和漏报，并且当与财务契约相关的会计变化更加显着时，这种减少更加明显。我的研究为会计准则和公认会计准则规定在债务承包效率中发挥的作用提供了新的证据。