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CEO Risk-taking Incentives and Bank Loan Syndicate Structure

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  • Liqiang Chen

Abstract

This paper investigates the effects of a borrowing firm's CEO risk-taking incentives on the structure of the firm's syndicated loans. When CEO risk-taking incentives are high, syndicates are structured to facilitate better due diligence and monitoring efforts. These syndicates have a smaller number of total lenders and are more concentrated, and lead arrangers will retain a greater portion of the loan. Moreover, CEO risk-taking incentives have a lesser effect on the syndicate structure when lead arrangers have a good reputation and a prior lending relationship with a borrowing firm, while they have a greater effect on the syndicate structure when borrowing firms have low information transparency, are financially distressed or have low growth prospects.

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  • Liqiang Chen, 2014. "CEO Risk-taking Incentives and Bank Loan Syndicate Structure," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 41(9-10), pages 1269-1308, November.
  • Handle: RePEc:bla:jbfnac:v:41:y:2014:i:9-10:p:1269-1308
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    Cited by:

    1. Yangyang Chen & Cameron Truong & Madhu Veeraraghavan, 2015. "CEO Risk-Taking Incentives and the Cost of Equity Capital," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 42(7-8), pages 915-946, September.
    2. repec:eee:revfin:v:34:y:2017:i:c:p:74-85 is not listed on IDEAS

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