publication . Article . Research . Preprint . 2012

Corporate boards and bank loan contracting

Bill B. Francis; Iftekhar Hasan; Michael Koetter; Qiang Wu;
Open Access Dutch; Flemish
  • Published: 12 Apr 2012
Abstract
We investigate the role of corporate boards in bank loan contracting. We find that when corporate boards are more independent, both price and nonprice loan terms (e.g., interest rates, collateral, covenants, and performance-pricing provisions) are more favorable, and syndicated loans comprise more lenders. In addition, board size, audit committee structure, and other board characteristics influence bank loan prices. However, they do not consistently affect all nonprice loan terms except for audit committee independence. Our study provides strong evidence that banks tend to recognize the benefits of board monitoring in mitigating information risk ex ante and cont...
Subjects
free text keywords: G21, G34, corporate governance; corporate boards; loan contract terms, Accounting, Finance, ddc:330, jel:G21, jel:G34, Loan, business.industry, business, Non-performing loan, Cross-collateralization, Collateral, Participation loan, Non-conforming loan, Financial system, Loan sale, Bridge loan
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