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Corporate Ownership Structure and Bank Loan Syndicate StructureChen LinChinese University of Hong Kong (CUHK) - Department of Finance Yue MaCity University of Hong Kong (CityUHK) - Department of Economics & Finance Paul H. MalatestaUniversity of Washington - Michael G. Foster School of Business Yuhai XuanHarvard Business School March 7, 2011 AFA 2012 Chicago Meetings Paper Abstract: 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 working papers seriesDate posted: December 18, 2010 ; Last revised: June 14, 2011Suggested CitationContact Information
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