https://scholars.lib.ntu.edu.tw/handle/123456789/414644
Title: | Can lenders discern managerial ability from luck? Evidence from bank loan contracts | Authors: | Bui D.G. Chen Y.-S. Hasan I. Lin C.-Y. |
Keywords: | Agency and information risk;Corporate governance;Managerial ability;Stakeholder relationship;The cost of debt | Issue Date: | 2018 | Journal Volume: | 87 | Start page/Pages: | 187-201 | Source: | Journal of Banking and Finance | Abstract: | We investigate the effect of managerial ability versus luck on bank loan contracting. Borrowers showing a persistently superior managerial ability over previous years (more likely due to ability) enjoy a lower loan spread, while borrowers showing a temporary superior managerial ability (more likely due to luck) do not enjoy any spread reduction. This finding suggests that banks can discern ability from luck when pricing a loan. Firms with high-ability managers are more likely to continue their prior lower loan spread. The spread-reduction effect of managerial ability is stronger for firms with weak governance structures or poor stakeholder relationships, corroborating the notion that better managerial ability alleviates borrowers�� agency and information risks. We also find that well governed banks are better able to price governance into their borrowers�� loans, which helps explain why good governance enhances bank value. ? 2017 Elsevier B.V. |
URI: | https://scholars.lib.ntu.edu.tw/handle/123456789/414644 | ISSN: | 03784266 | DOI: | 10.1016/j.jbankfin.2017.09.023 |
Appears in Collections: | 財務金融學系 |
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