Debt, information asymmetry and bankers on board

Joao Amaro de Matos and Joao Mergulhao

Nova SBE Working Paper Series from Universidade Nova de Lisboa, Nova School of Business and Economics

Abstract: We provide evidence that the presence of bankers in the board of directors reduce information asymmetry between credit markets and fi rms. We show that the impact of the presence of bankers on leverage is driven by firms with low level of debt. This eff ect is amplifi ed the more connected the bankers are to the corporate world. Additionally the results are more pronounced for less transparent firms. Our findings suggest that the connectedness of bankers play a key role in reducing information asymmetry.

Keywords: information asymmetry; debt level; social networks; corporate boards; bankers (search for similar items in EconPapers)
JEL-codes: D82 G21 G32 L14 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:unl:unlfep:wp597

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