Do Shareholder Rights Affect the Cost of Bank Loans?

• 成果类型: Article
• 署名作者: Chava, Sudheer; Livdan, Dmitry; Purnanandam, Amiyatosh
• 署名单位: Texas A&M University System; Texas A&M University College Station; Mays Business School; University of California System; University of California Berkeley; University of Michigan System; University of Michigan
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhn111
• 发表日期: 2009
• 页码: 2973
• 关键词: CORPORATE GOVERNANCE; debt; ratings; mergers; firm

摘要

Using a large sample of bank loans issued to U.S. firms between 1990 and 2004, we find that lower takeover defenses (as proxied by the lower G-index of Gompers, Ishii, and Metrick 2003) significantly increase the cost of loans for a firm. Firms with lowest takeover defense (democracy) pay a 25% higher spread on their bank loans as compared with firms with the highest takeover defense (dictatorship), after controlling for various firm and loan characteristics. Further investigations indicate that banks charge a higher loan spread to firms with higher takeover vulnerability mainly because of their concern about a substantial increase in financial risk after the takeover. Our results have important implications for understanding the link between a firm's governance structure and its cost of capital. Our study suggests that firms that rely too much on corporate control market as a governance device are punished by costlier bank loans.