Ownership dispersion across large shareholders and loan-syndicate structure

Yane Chandera, Lukas Setia-Atmaja, Cynthia Afriani Utama and Zaäfri Ananto Husodo

Research in International Business and Finance, 2021, vol. 55, issue C

Abstract: This study tests the relationship between ownership dispersion across large shareholders and the structure of loan syndicates. The results of an analysis of a set of bank loan contracts that were extended to Indonesian listed firms, from 1992 to 2016, show that an uneven ownership distribution between the largest controlling shareholder and multiple large shareholders is associated with a smaller and more concentrated syndicate. In line with the agency and moral hazard theoretical framework, the results suggest that in a weak legal system, when banks are lending to companies that are at a high risk of expropriation, they decrease the syndicate size and increase the syndicate concentration in order to intensify their efforts in due diligence and monitoring.

Keywords: Syndicate size; Syndicate concentration; Loan monitoring; Ownership dispersion; Multiple large shareholders (search for similar items in EconPapers)
JEL-codes: G21 G32 G34 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:55:y:2021:i:c:s0275531920309417

DOI: 10.1016/j.ribaf.2020.101334

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