Corporate ownership structure and bank loan syndicate structure

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journal

61 Scopus Citations
View graph of relations

Author(s)

  • Chen Lin
  • Yue Ma
  • Paul Malatesta
  • Yuhai Xuan

Detail(s)

Original languageEnglish
Pages (from-to)1-22
Journal / PublicationJournal of Financial Economics
Volume104
Issue number1
Publication statusPublished - Apr 2012
Externally publishedYes

Abstract

Using a novel data set on corporate ownership and control, we show that the divergence between the control rights and cash-flow rights of a borrowing firm's largest ultimate owner has a significant impact on the concentration and composition of the firm's loan syndicate. When the control-ownership divergence is large, lead arrangers form syndicates with structures that facilitate enhanced due diligence and monitoring efforts. These syndicates tend to be relatively concentrated and composed of domestic banks that are geographically close to the borrowing firms and that have lending expertise related to the industries of the borrowers. We also examine factors that influence the relation between ownership structure and syndicate structure, including lead arranger reputation, prior lending relationship, borrowing firm informational opacity, presence of multiple large owners, laws and institutions, and financial crises. © 2011 Elsevier B.V.

Research Area(s)

  • Excess control rights, Ownership structure, Syndicated loans

Citation Format(s)

Corporate ownership structure and bank loan syndicate structure. / Lin, Chen; Ma, Yue; Malatesta, Paul; Xuan, Yuhai.

In: Journal of Financial Economics, Vol. 104, No. 1, 04.2012, p. 1-22.

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journal