Institutional Investor Attention, Agency Conflicts, and the Cost of Debt

• 成果类型: Article
• 署名作者: El Ghoul, Sadok; Guedhami, Omrane; Mansi, Sattar A.; Yoon, Hyo Jin
• 署名单位: University of Alberta; University of South Carolina System; University of South Carolina Columbia; Sungkyunkwan University (SKKU); Virginia Polytechnic Institute & State University; University of Texas System; University of Texas El Paso
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2022.4593
• 发表日期: 2023
• 页码: 5596-5617
• 关键词: shareholder distraction; Agency conflicts; dual holders; Cost of debt

摘要

Using a new measure of shareholder inattention constructed from exogenous industry shocks to institutional investor portfolios, we find that firms with distracted shareholders are associated with a higher cost of debt. This effect is stronger for firms with more powerful CEOs, firms with higher information asymmetry, and those operating in less competitive product markets. Further testing suggests that the inattention-cost of debt relation is driven primarily by dual holders directly observing shareholder distraction. Our results are robust to controlling for inattention at the retail investor level and to other external monitors, including credit rating agencies, financial analysts, and Big 4 auditors. Overall, our evidence suggests that institutional shareholder inattention has an incrementally negative effect on bond pricing.