Abstract

  
 

Citations (12)



 
 

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Managerial Compensation and the Market Reaction to Bank Loans


Andres Almazan


University of Texas at Austin - Department of Finance

Javier Suarez


Centre for Monetary and Financial Studies (CEMFI); Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI)
December 2000

CEPR Discussion Paper No. 2643

Abstract:     
This Paper considers why a manager would choose to submit himself to the discipline of bank monitoring. This issue is analysed within the context of a model where the manager enjoys private benefits, which can be restricted by the monitor, and is optimally compensated by shareholders. Within this setting, we find that managers will submit to monitoring when they receive favourable private information. This result is consistent with event study evidence that suggests that the market has a favourable view of financing choices that increase monitoring.

Number of Pages in PDF File: 43

Keywords: Banks, managerial compensation, monitoring, optimal contracts

JEL Classification: G32, G34

working papers series


Date posted: January 29, 2001  

Suggested Citation

Almazan, Andres and Suarez, Javier, Managerial Compensation and the Market Reaction to Bank Loans (December 2000). CEPR Discussion Paper No. 2643. Available at SSRN: http://ssrn.com/abstract=258075

Contact Information

Andres Almazan (Contact Author)
University of Texas at Austin - Department of Finance ( email )
Red McCombs School of Business
Austin, TX 78712
United States
512-471-4368 (Phone)
512-471-5073 (Fax)
HOME PAGE: http://www.mccombs.utexas.edu/dept/finance/faculty/profiles/index.asp?addTarget=4
Javier Suarez
Centre for Monetary and Financial Studies (CEMFI) ( email )
Casado del Alisal 5
28014 Madrid
Spain
+34 91 429 0551 (Phone)
+34 91 429 1056 (Fax)
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
European Corporate Governance Institute (ECGI)
c/o ECARES ULB CP 114
B-1050 Brussels
Belgium
HOME PAGE: http://www.ecgi.org
Feedback to SSRN (Beta)


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Citations:  12
Footnotes:  25

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