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

CEO Risk‐taking Incentives and Bank Loan Syndicate Structure

“…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.…”

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

“…To facilitate apples-to-apples comparisons, we focus on pure term loans (3,056 cases) and pure revolvers (6,477 cases) in our main regressions and eliminate other types of term loans, revolvers, and other loans. 10 As shown below, when all the syndicated loans are pooled, as is common in the syndicated loan literature, potentially misleading findings occur.…”

“…For matched borrowers, we merge loan pricing information from DealScan into our SNC sample based on the loan origination date, maturity date, commitment value, and loan type. Of our SNC samples, we 10 We remove several types of term loans: Term Loan A tranches (generally amortizing loans that are largely syndicated to banks: 149 cases); Term Loan B tranches (typically loans with longer maturities than Term Loan A tranches, with bullet payments, and syndicated to institutional investors: 191 cases); Term Loan C tranches (similar to Term Loan B tranches but with longer maturities: 14 cases); bridge term loans (temporary financing for up to one year: 7 cases); asset-based term loans (loans secured by assets: 5 cases); and debtor-in-possession term loans (financing arranged while going through the Chapter 11 bankruptcy process: 1 case). We also discard various types of credit lines: asset-based revolvers (546 cases); revolvers converting to term loans (208 cases); debtor-in-possession revolvers (3 cases); non-revolving lines of credit (737); and non-revolving lines of credit that convert to term loans (133 cases).…”

How do lead banks use their private information about loan quality in the syndicated loan market?

“…Our hypotheses have not been investigated in the extant literature. They cannot be addressed using the DealScan dataset, which most studies of the syndicated loan market use, since DealScan contains only publicly available information (e.g., Dennis and Mullineaux, 2000;Bosch and Steffen, 2007;Champagne and Kryzanowski, 2007;Sufi, 2007;Chava and Roberts, 2008;Berndt and Gupta, 2009;Drucker and Puri, 2009;Haselmann and Wachtel, 2011;Bharath, Dahiya, and Hallak, 2013;Firestone and Rezende, 2013;Bradley and Roberts, 2015).…”