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Executives’ early-life experience and corporate debt contracting: Evidence from CEO military experience

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  • Nguyen, Harvey
  • Pham, Mia Hang
  • Vu, Van Hoang

Abstract

We show that the leadership style of veteran CEOs has important implications for their companies’ costs of bank loans. We find that banks charge, on average, 10.8 basis points lower for firms headed by veteran CEOs, compared to otherwise similar firms. Firms with veteran CEOs are also subject to lower collateral requirements and covenant restrictions. The effect of veteran CEOs on loan costs comes from an improvement in the firm’s information environment and a reduction in firm risk. Overall, our study highlights the increasing relevance of leadership background in lending decisions, suggesting that personal characteristics may influence access to capital in global credit markets.

Suggested Citation

  • Nguyen, Harvey & Pham, Mia Hang & Vu, Van Hoang, 2025. "Executives’ early-life experience and corporate debt contracting: Evidence from CEO military experience," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 103(C).
    • Handle: RePEc:eee:intfin:v:103:y:2025:i:c:s1042443125000903
    DOI: 10.1016/j.intfin.2025.102200
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    JEL classification:

    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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