Does Poor Performance Damage the Reputation of Financial Intermediaries? Evidence from the Loan Syndication Market

• 成果类型: Article
• 署名作者: Gopalan, Radhakrishnan; Nanda, Vikram; Yerramilli, Vijay
• 署名单位: Washington University (WUSTL); University System of Georgia; Georgia Institute of Technology; University of Houston System; University of Houston
• 刊物名称: JOURNAL OF FINANCE
• ISSN/ISSBN: 0022-1082
• DOI: 10.1111/j.1540-6261.2011.01692.x
• 发表日期: 2011
• 页码: 2083-2120
• 关键词: INVESTMENT BANK REPUTATION; career concerns; IMPACT; distress

摘要

We investigate the effect of poor performance on financial intermediary reputation by estimating the effect of large-scale bankruptcies among a lead arranger's borrowers on its subsequent syndication activity. Consistent with reputation damage, such lead arrangers retain larger fractions of the loans they syndicate, are less likely to syndicate loans, and are less likely to attract participant lenders. The consequences are more severe when borrower bankruptcies suggest inadequate screening or monitoring by the lead arranger. However, the effect of borrower bankruptcies on syndication activity is not present among dominant lead arrangers, and is weak in years in which many lead arrangers experience borrower bankruptcies.