CEO Risk-taking incentives and bank loan syndicate structure

• Autores: Liqiang Chen
• Localización: Journal of Business Finance & Accounting, ISSN-e 1468-5957, Vol. 41, Nº. 9-10, 2014, págs. 1269-1308
• Idioma: inglés
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• Resumen

  • 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.