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Debt, Information Asymmetry and Bankers on Board

Joao Amaro de Matos and Joao Mergulhao

FEUNL Working Paper Series from Universidade Nova de Lisboa, Faculdade de Economia

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. JEL codes: G32, G21, D82, L14

Keywords: information asymmetry; debt level; social networks; corporate boards; bankers (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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