Corporate Ownership Structure and Bank Loan Syndicate Structure
The University of Hong Kong - Faculty of Business and Economics
(马跃) Yue Ma
City University of Hong Kong (CityUHK) - Department of Economics & Finance
Paul H. Malatesta
University of Washington - Michael G. Foster School of Business
University of Illinois at Urbana-Champaign
March 7, 2011
Journal of Financial Economics (JFE), Vol. 104, No. 1, 2012
AFA 2012 Chicago Meetings Paper
This paper examines the relation between corporate ownership structure and bank loan syndicate structure. We find that the divergence between control rights and cash-flow rights of a borrowing firm's largest ultimate owner has a significant impact on the concentration and composition of the firm’s loan syndicate. When the control-ownership divergence is large, lead arrangers form syndicates with structures that facilitate enhanced due diligence and monitoring efforts. These syndicates tend to be relatively concentrated and comprised of domestic banks that are geographically close to the borrowing firms and that have lending expertise related to the industries of the borrowers. We also examine factors that influence the relation between ownership structure and syndicate structure, including firm opacity, presence of multiple large owners, bank reputation, lending relationship, law and institution, and financial crises.
Number of Pages in PDF File: 51
Keywords: Ownership Structure, Syndicated Loan, Excess Control Rights
Date posted: December 18, 2010 ; Last revised: May 22, 2013
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