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Bank Monitoring and Environmental Risk

13 Pages Posted: 1 Mar 2007  

Sebouh Aintablian

American University of Beirut

Patricia A. McGraw

Ryerson University

Gordon S. Roberts

York University - Schulich School of Business

Abstract

Loan announcement effects for 152 Canadian companies are examined to investigate the efficiency of monitoring by banks facing lender environmental liability. Market reaction to the announcement of bank debt to 'environmental' firms is more positive and significant than for 'non-environmental' firms and, for firms in industries with a higher likelihood of experiencing spill events, is more positive and significant, reinforcing earlier results that establish a relationship between specific loan/borrower characteristics and announcement period excess returns and providing further evidence on the 'uniqueness' of bank loans by demonstrating the superior ability of banks to monitor corporate borrowers exposed to environmental liability.

Suggested Citation

Aintablian, Sebouh and McGraw, Patricia A. and Roberts, Gordon S., Bank Monitoring and Environmental Risk. Journal of Business Finance & Accounting, Vol. 34, No. 1-2, pp. 389-401, January/March 2007. Available at SSRN: https://ssrn.com/abstract=966479 or http://dx.doi.org/10.1111/j.1468-5957.2006.00644.x

Sebouh Aintablian (Contact Author)

American University of Beirut ( email )

850 Third Avenue, 18th floor
New York, NY 10022-6297
United States

Patricia A. McGraw

Ryerson University ( email )

Ryerson University, 350 Victoria Street, Toronto
Toronto, Ontario M5B 2K3
Canada

Gordon S. Roberts

York University - Schulich School of Business ( email )

4700 Keele Street
Toronto, Ontario M3J 1P3
Canada
416-736-2100 x77953 (Phone)
416-736-5687 (Fax)

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