The Effect of Firm-Level Political Uncertainty on Bank Loan Contracting

2019 ◽  
Author(s):  
Walid Saffar ◽  
Yang Wang ◽  
Kuo-Chiang (John) Wei
Keyword(s):  
Bank Loan ◽  
Political Uncertainty ◽  
Firm Level ◽  
Loan Contracting

Accounting quality, governance standards, and syndicated loan contracts

2016 ◽  
Vol 28 (1) ◽  
pp. 2-15 ◽  
Author(s):  
Liang Song ◽  
Joel C Tuoriniemi
Keyword(s):  
Financial Crisis ◽  
Emerging Markets ◽  
Developed Countries ◽  
Bank Loan ◽  
Accounting Quality ◽  
Firm Level ◽  
Content Type ◽  
Loan Contracts ◽  
Loan Contracting ◽  
Syndicated Loan

Purpose – The purpose of this paper is to examine how firms’ accounting quality affects bank loan contracting in seven emerging markets and whether these relationships are affected by borrowers’ governance standards. Design/methodology/approach – The study sample period is 1999-2007 because the syndicated loan market was severely affected by the East Asian financial crisis of 1998 and the US financial crisis of 2008. The final sample includes 719 loan observations for 75 firms in seven emerging markets. Findings – The authors find that syndicated lenders provide loans with more favorable terms such as larger amounts, longer maturity and lower interest spread to borrowers in emerging markets with higher accounting quality. The authors also find that the influences of accounting quality on syndicated loan contracting for borrowers in emerging markets exist only with higher country- and firm-level governance rankings. The results of this paper suggest that lenders place more value on accounting numbers generated by borrowers in emerging markets with stronger internal and country governance frameworks. Originality/value – Overall, this research provides new insights about how accounting quality affects the contract design. Specifically, the extant literature has demonstrated the effects of accounting quality on financial contracts in developed countries (e.g. Bharath et al., 2008). The authors extend this analysis to borrowers in emerging markets and confirm a similar result. Most notably, the authors explore whether the relationship between accounting quality and syndicated loan contracts is influenced by borrowers’ country- and firm-level governance, and find that accounting quality matters only when accompanied by high-quality governance. This research provides new insights about how accounting quality and governance standards affect the terms of borrowing contracts in emerging markets.

scholarly journals The Effects of Financial Reporting on Bank Loan Contracting in Global Markets: Evidence from Mandatory IFRS Adoption

2015 ◽  
Vol 14 (2) ◽  
pp. 45-81 ◽  
Author(s):  
Tai-Yuan Chen ◽  
Chen-Lung Chin ◽  
Shiheng Wang ◽  
Wei-Ren Yao
Keyword(s):  
Interest Rates ◽  
Financial Reporting ◽  
Bank Loans ◽  
Bank Loan ◽  
Accounting Quality ◽  
Firm Level ◽  
Financial Reporting Standards ◽  
Ifrs Adoption ◽  
Loan Contracting ◽  
The 2008 Financial Crisis

ABSTRACT This study examines the effects of the mandatory adoption of International Financial Reporting Standards (IFRS) on the contract terms of bank loans in a global setting. Using a difference-in-differences design based on 26,474 bank loans in 31 countries during the 2000–2011 period, we find that borrowers who mandatorily adopt IFRS experience an increase in interest rates, a reduction in the use of accounting-based financial covenants, an increase in the likelihood that a loan is collateralized, a reduction in loan maturity, and an increase in the fraction of a loan retained by lead arrangers. These findings are robust to the removal of the 2008 financial crisis from our analysis, as well as to the matching of IFRS and non-IFRS borrowers on various country- and firm-level characteristics. Furthermore, we find that these changes are more pronounced for borrowers with greater financial reporting changes, as well as those with poorer accounting quality after IFRS adoption. JEL Classifications: G15; G21; F34; M41.

Political uncertainty and bank loan contracting

2014 ◽  
Vol 29 ◽  
pp. 281-286 ◽  
Author(s):  
Bill B. Francis ◽  
Iftekhar Hasan ◽  
Yun Zhu
Keyword(s):  
Bank Loan ◽  
Political Uncertainty ◽  
Loan Contracting

Public disclosure and bank loan contracting: evidence from emerging markets

2014 ◽  
Vol 22 (1) ◽  
pp. 2-19 ◽  
Author(s):  
Iftekhar Hasan ◽  
Liang Song
Keyword(s):  
Emerging Markets ◽  
Private Information ◽  
Bank Loans ◽  
Bank Loan ◽  
Corporate Disclosure ◽  
Financial Contracts ◽  
Firm Level ◽  
Content Type ◽  
Country Level ◽  
Loan Contracting

Purpose – The purpose of this paper is to fill this void in the existing literature and investigate how firms’ disclosure policies influence bank loan contracting in emerging markets after controlling for the influence of borrowers’ private information obtained by banks. Furthermore, the paper examines how firms’ disclosure and non-disclosure governance interact to affect financial contracts. Design/methodology/approach – The key variables Disclosure and Firm Governance are based on a survey by Credit Lyonnais Securities Asia (CLSA) in 2000. The paper hand-merges CLSA disclosure and governance data with the Dealscan database and Worldscope database by firm names. The paper conducts a multivariate analysis to investigate how firms’ disclosure policies influence bank loan contracting and how firms’ disclosure and non-disclosure governance interact to affect financial contracts. Findings – The authors found that firms with superior disclosure policies obtain bank loans with more favorable loan contracting terms, such as larger amounts, longer maturity, and lower spread. In addition, the effects of disclosure on bank loan contracting are more pronounced for borrowers with superior firm-level non-disclosure governance or firms located in a country with better country-level governance. Originality/value – The paper provides a more comprehensive view of the effects of corporate disclosure has on financial contracts in emerging economies.

Adverse Climate Incidents and Bank Loan Contracting

2020 ◽  
Author(s):  
Deniz Anginer ◽  
Karel Hrazdil ◽  
Jiyuan Li ◽  
Ray Zhang
Keyword(s):  
Bank Loan ◽  
Loan Contracting
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