Debt, Information Asymmetry and Bankers on Board

FEUNL Working Paper Series No. 597

29 Pages Posted: 24 Oct 2015

See all articles by Joao Amaro de Matos

Joao Amaro de Matos

Nova School of Business and Economics

Joao Mergulhao

Sao Paulo School of Economics-FGV

Date Written: 2015

Abstract

We provide evidence that the presence of bankers in the board of directors reduce information asymmetry between credit markets and firms. We show that the impact of the presence of bankers on leverage is driven by firms with low level of debt. This effect is amplified 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.

Keywords: information asymmetry, debt level, social networks, corporate boards, bankers

JEL Classification: G32, G21, D82, L14

Suggested Citation

Amaro de Matos, Joao and Mergulhão, João, Debt, Information Asymmetry and Bankers on Board (2015). FEUNL Working Paper Series No. 597. Available at SSRN: https://ssrn.com/abstract=2678922 or http://dx.doi.org/10.2139/ssrn.2678922

Joao Amaro de Matos (Contact Author)

Nova School of Business and Economics ( email )

Campus de Campolide
Lisbon, 1099-038
Portugal

HOME PAGE: http://docentes.fe.unl.pt/~amatos

João Mergulhão

Sao Paulo School of Economics-FGV ( email )

Rua Itapeva 474
s.1202
São Paulo, São Paulo 01332-000
Brazil

HOME PAGE: http://eesp.fgv.br/professores/joao_mergulhao

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