Do Shareholder Rights Affect Syndicate Structure? Evidence from a Natural Experiment

Bharath, Sreedhar T.; Dahiya, Sandeep; Hallak, Issam

doi:10.2139/ssrn.2020195

Cited by 5 publications

(18 citation statements)

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“…Corporate purposes, working capital, debt repayment, takeover and commercial paper backup are the major purposes for the loans. The results are similar to recent empirical studies on bank loans (e.g., Ivashina, ; Bharath et al., ).…”

Section: Sample and Variablessupporting

confidence: 91%

“…The negative coefficients of the G‐index indicate that lead arrangers hold a smaller portion of bank loans and the syndication structure is less concentrated when borrowing firms have more anti‐takeover provisions. Consistent with recent empirical studies (e.g., Bharath et al., ), the results suggest that there is less conflict of interest between shareholders and creditors if borrowing firms have weak shareholder rights protections. More important, the negative coefficients of the interaction terms between the G‐index and vega suggest that vega 's effects on the syndication structure are attenuated as the G‐index increases, consistent with the notion that participant banks are less concerned by CEO risk‐taking incentives when borrowing firms have weak shareholder rights.…”

Section: Robustness Testssupporting

confidence: 89%

“…Moreover, as suggested by Bharath et al. (), repeated relationship lending transactions can reduce monitoring costs for lead arrangers. Therefore, past lending relationships can be regarded as lead arrangers’ commitment and advantage in engaging in efficient monitoring and can thus alleviate moral hazard problems concerning syndication.…”

Section: Theoretical Framework and Hypothesesmentioning

confidence: 97%

“…Bharath et al. () find that syndication structures will be less concentrated as shareholder rights decline using a natural experiment of the passage of second generation of anti‐takeover laws in the US. Vasvari () reports that both delta and vega are positively related to lead arrangers’ ownership.…”

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confidence: 99%

“…We follow extant empirical studies (e.g., Bharath et al., ) and consider facilities with missing value in collateral to be uncollateralized.…”

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confidence: 99%

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CEO Risk‐taking Incentives and Bank Loan Syndicate Structure

Chen

2014

Business Fin & Account

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This paper investigates the effects of a borrowing firm's CEO risk‐taking incentives on the structure of the firm's syndicated loans. When CEO risk‐taking incentives are high, syndicates are structured to facilitate better due diligence and monitoring efforts. These syndicates have a smaller number of total lenders and are more concentrated, and lead arrangers will retain a greater portion of the loan. Moreover, CEO risk‐taking incentives have a lesser effect on the syndicate structure when lead arrangers have a good reputation and a prior lending relationship with a borrowing firm, while they have a greater effect on the syndicate structure when borrowing firms have low information transparency, are financially distressed or have low growth prospects.

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Section: Sample and Variablessupporting

confidence: 91%

Section: Robustness Testssupporting

confidence: 89%

Section: Theoretical Framework and Hypothesesmentioning

confidence: 97%

mentioning

confidence: 99%

“…We follow extant empirical studies (e.g., Bharath et al., ) and consider facilities with missing value in collateral to be uncollateralized.…”

mentioning

confidence: 99%

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CEO Risk‐taking Incentives and Bank Loan Syndicate Structure

Chen

2014

Business Fin & Account

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The catalytic effect of internationalization on innovation

Chang

Hsu

et al. 2018

Euro Fin Management

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This paper examines how internationalization spurs corporate innovation. Internationalization heightens the competitive environment of firms, while increasing financial flexibility. The increased competition reduces agency problems and motivates innovation projects which are supported by improved financial flexibility. We obtain robust evidence with the difference‐in‐differences and instrumental variable approaches. The passage of antitakeover laws and the 1989 Loma Prieta earthquake are treated as exogenous variations to corporate governance; shocks on firm capital supply measured by mutual fund redemptions are also considered. A less positive finding is that internationalization motivates firms to focus on the appropriability of innovation rather than on basic research.

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How Do Lead Banks Use Their Private Information about Loan Quality in the Syndicated Loan Market?

Balasubramanyan¹,

Berger²,

Koepke³

2016

Working Paper (Federal Reserve Bank of Cleveland)

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Little is known about how lead banks in the syndicated loan market use their private information about loan quality. We formulate and test two hypotheses, the Signaling Hypothesis and Sophisticated Syndicate Hypothesis. To measure private information, we use Shared National Credit (SNC) internal loan ratings, which we make comparable across banks using concordance tables. We fi nd that favorable private information is associated with higher loan retention by lead banks for term loans, consistent with empirical domination of the Signaling Hypothesis, while neither hypothesis dominates for revolvers. Differences in syndicate structure at least partially explain this disparity. JEL codes: G21, G28.

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Do Shareholder Rights Affect Syndicate Structure? Evidence from a Natural Experiment

Cited by 5 publications

References 0 publications

CEO Risk‐taking Incentives and Bank Loan Syndicate Structure

CEO Risk‐taking Incentives and Bank Loan Syndicate Structure

The catalytic effect of internationalization on innovation

How Do Lead Banks Use Their Private Information about Loan Quality in the Syndicated Loan Market?

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