Are firm- and country-specific governance substitutes? Evidence from financial contracts in emerging markets

Bill Francis, Iftekhar Hasan and Liang Song

No 12/2012, Bank of Finland Research Discussion Papers from Bank of Finland

Abstract: We investigate how borrowers corporate governance influences bank loan contracting terms in emerging markets and how this relation varies across countries with different country-level governance. We find that borrowers with stronger corporate governance obtain favorable contracting terms with respect to loan amount, maturity, collateral requirements, and spread. Firm-level and country-level corporate governance are substitutes in writing and enforcing financial contracts. We also find that the distinctiveness of borrowers characteristics affect the relation between firm-level corporate governance and loan contracting terms. Our findings are robust, irrespective of types of regression methods and specifications.

JEL-codes: G20 G30 G31 G34 G38 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (1)

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Journal Article: ARE FIRM- AND COUNTRY-SPECIFIC GOVERNANCE SUBSTITUTES? EVIDENCE FROM FINANCIAL CONTRACTS IN EMERGING MARKETS (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:bofrdp:rdp2012_012

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