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Universal banks and corporate control: Evidence from the global syndicated loan market
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Resumo(s)
We investigate the effects of bank control over borrower firms whether by representation on boards of directors or by the holding of shares through bank asset management divisions. Using a large sample of syndicated loans, we find that banks are more likely to act as lead arrangers in loans when they exert some control over the borrower firm. Bank-firm governance links are associated with higher loan spreads during the 2003-2006 credit boom, but lower spreads during the 2007-2008 financial crisis. Additionally, these links mitigate credit rationing effects during the crisis. The results are robust to several methods to correct for the endogeneity of the bank- firm governance link. Our evidence, consistent with intertemporal smoothing of loan rates, suggests there are costs and benefits from banks’ involvement in firm governance.
Descrição
Palavras-chave
Corporate boards Institutional ownership Syndicated loans Universal banking
Contexto Educativo
Citação
This is a pre-copyedited, author-produced PDF of an article accepted for publication in Review of Financial Studies following peer review. The version of record Ferreira, M. A., & Matos, P. (2012). Universal Banks and Corporate Control: Evidence from the Global Syndicated Loan Market. Review of Financial Studies, 25(9), 2703–2744 is available online at: http://rfs.oxfordjournals.org/content/25/9/2703
Editora
Oxford University Press