cover_journal-of-corporate-finance.jpg

Private Benefits of Control and Bank Loan Contracts

This paper investigates whether or not private benefits of control by managers and large shareholders influence the financing cost of firms. Evidence shows that lending banks demand a significantly higher loan spread, higher fees, shorter loan maturity, smaller loan size, stricter covenants, and greater collateral on firms with greater private benefits of control. Results are stronger for firms with weak corporate governance quality, supporting the agency cost viewpoint. Such evidence implies that banks consider higher private benefits of control as a type of agency problem when they make lending decisions.

01. April 2018

Authors Chih-Yung Lin Wei-Che Tsai Iftekhar Hasan Le Quoc Tuan

Whom to contact

For Researchers

Professor Iftekhar Hasan, PhD
Professor Iftekhar Hasan, PhD
Economist

If you have any further questions please contact me.

Request per E-Mail

For Journalists

Mitglied der Leibniz-Gemeinschaft LogoTotal-Equality-LogoWeltoffen Logo