CEO Risk‐taking Incentives and Bank Loan Syndicate Structure. (27th October 2014)

• Record Type: Journal Article
• Authors: Chen, Liqiang
• Is Part Of: Journal of business finance & accounting. Volume 41:Number 9/10(2014)
• Page Start: 1269
• Page End: 1308
• Publication Date: 2014-10-27
• Subjects: Finance -- Periodicals; Accounting -- Periodicals; Business -- Periodicals; 658.15
• DOI: 10.1111/jbfa.12087
• Languages: English
• ISSNs: 0306-686X

Abstract

<abstract abstract-type="main"> <title>Abstract</title> <p>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.</p> </abstract>