Do Controlling Shareholders Matter for the Conditions of Bank Loans? Evidence From Spain

Posted: 31 Jan 2020

See all articles by Celia Alvarez-Botas

Celia Alvarez-Botas

Universidad de Oviedo

Carlos Fernandez

Oviedo University - School of Economics and Business

Víctor M. González

Universidad de Oviedo - Facultad de Economicas

Date Written: January 8, 2020

Abstract

This paper analyses the influence of large controlling shareholders on the terms of bank loans for a sample of 984 loans to 261 nonfinancial Spanish public and private firms over the period 2001-2017. The results show that the presence of large controlling shareholders increases interest rate spread and reduces loan maturity. A less evenly balanced distribution of ownership among large shareholders is associated with higher loan spreads. During the crisis, non-financial Spanish firms obtained worse conditions on bank loans, as loan spread increased and maturity decreased. Furthermore, the maturity of bank loans was found to be positively related to the presence of families as large controlling shareholders during the financial crisis, reflecting that these shareholders reduced the agency costs of debt.

Keywords: controlling shareholders, noncontrolling shareholders, types of shareholders, agency costs of debt, loan terms

JEL Classification: G01, G21, G32

Suggested Citation

Alvarez-Botas, Celia and Fernandez, Carlos and González, Víctor M., Do Controlling Shareholders Matter for the Conditions of Bank Loans? Evidence From Spain (January 8, 2020). Available at SSRN: https://ssrn.com/abstract=3515886

Celia Alvarez-Botas (Contact Author)

Universidad de Oviedo ( email )

Avenida del Cristo s/n
33071-Oviedo
Asturias
Spain
985102820 (Phone)

Carlos Fernandez

Oviedo University - School of Economics and Business ( email )

Campus del Cristo, s/n
Oviedo, Asturias 33071
Spain

Víctor M. González

Universidad de Oviedo - Facultad de Economicas ( email )

Campus del Cristo, s/n
Oviedo, Asturias 33071
Spain
+34 985 10 28 26 (Phone)

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