Overlapping board connections with banker directors and corporate loan terms: Evidence from syndicated loans

Asli Togan

Global Finance Journal, 2021, vol. 50, issue C

Abstract: I look at the relationship between corporate loan terms and board members' connections to bankers through employment on other boards, a connection relatively unaffected by confounding factors. Using syndicated loan data, I find that firms connected to bankers via other boards are more likely to borrow, and they receive cheaper pricing. However, loan maturity does not differ between connected and unconnected firms. During the 2007–2008 financial crisis loan availability declined for all firms, but connected firms continued to borrow and to receive lower spreads. Generally, my results support the importance of social connections in decreasing information asymmetry and reducing transaction costs.

Keywords: Board of directors; Social networks; Syndicated loans; Bank lending; Lending outcomes; Asymmetric information (search for similar items in EconPapers)
JEL-codes: G21 G31 G32 G34 L14 L25 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1044028321000703
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:glofin:v:50:y:2021:i:c:s1044028321000703

DOI: 10.1016/j.gfj.2021.100672

Access Statistics for this article

Global Finance Journal is currently edited by Manuchehr Shahrokhi

More articles in Global Finance Journal from Elsevier
Bibliographic data for series maintained by Catherine Liu ().