Financial Statement Disaggregation and Syndicated Loan Terms: International Evidence

52 Pages Posted: 7 Dec 2021 Last revised: 30 Nov 2022

See all articles by Ann Ling‐Ching Chan

Ann Ling‐Ching Chan

National Chengchi University (NCCU)

Vincent Chen

National Chengchi University (NCCU) - Department of Accounting

Kevin Koh

Nanyang Technological University (NTU) - Nanyang Business School

Date Written: December 2, 2021

Abstract

This study examines the extent to which financial statement disaggregation (FSD) affects syndicated loan terms in an international setting. We find that greater FSD is associated with more favorable syndicated loan terms and that such effect is more pronounced in countries with strong creditor rights and high debt enforceability. In addition, we find that FSD facilitates lenders’ use of covenants to substitute legal protection in countries with weak legal institutions. Our exploratory analyses suggest that the effect of disaggregated accounting information on loan terms is primarily attributable to balance sheet disaggregation rather than income statement disaggregation. Specifically, greater disaggregated information with regards to current assets and investments is negatively associated with syndicated loan pricing whereas finer information with respect to long-term debt and common equity is more related with favorable non-price loan terms. Overall, our study enhances the understanding the role of FSD in the global debt market.

Suggested Citation

Chan, Ann and Chen, Vincent and Koh, Kevin, Financial Statement Disaggregation and Syndicated Loan Terms: International Evidence (December 2, 2021). Nanyang Business School Research Paper No. 22-05, Available at SSRN: https://ssrn.com/abstract=3976122 or http://dx.doi.org/10.2139/ssrn.3976122

Ann Chan

National Chengchi University (NCCU) ( email )

#64, Chih-Nan Rd. Sec. 2
Wen-Shan District
Taipei, 116
Taiwan

Vincent Chen

National Chengchi University (NCCU) - Department of Accounting ( email )

No. 64, Sec 2
Chih-Nan Road
Wenshan, Taipei
Taiwan

Kevin Koh (Contact Author)

Nanyang Technological University (NTU) - Nanyang Business School ( email )

S3-B2C-96, Nanyang Avenue
Nanyang Business School , NTU
Singapore, 639798
Singapore
(+65) 6790 4096 (Phone)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
39
Abstract Views
234
PlumX Metrics