Executives’ early-life experience and corporate debt contracting: Evidence from CEO military experience

Harvey Nguyen, Mia Hang Pham and Van Hoang Vu

Journal of International Financial Markets, Institutions and Money, 2025, vol. 103, issue C

Abstract: We show that the leadership style of veteran CEOs has important implications for their companies’ costs of bank loans. We find that banks charge, on average, 10.8 basis points lower for firms headed by veteran CEOs, compared to otherwise similar firms. Firms with veteran CEOs are also subject to lower collateral requirements and covenant restrictions. The effect of veteran CEOs on loan costs comes from an improvement in the firm’s information environment and a reduction in firm risk. Overall, our study highlights the increasing relevance of leadership background in lending decisions, suggesting that personal characteristics may influence access to capital in global credit markets.

Keywords: Veterans; Loan contracts; Information asymmetry; Risk-taking; Financing costs (search for similar items in EconPapers)
JEL-codes: G31 G32 J24 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:intfin:v:103:y:2025:i:c:s1042443125000903

DOI: 10.1016/j.intfin.2025.102200

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