scholarly journals Environmental, Social, and Governance Incidents and Bank Loan Contracts

2021 ◽  
Vol 13 (4) ◽  
pp. 1885
Author(s):  
Ruoyu He ◽  
Xueli Chen ◽  
Cheng Chen ◽  
Jianqiao Zhai ◽  
Lixin Cui
Keyword(s):  
Economic Effects ◽  
Bank Loan ◽  
Low Carbon ◽  
Publicly Traded ◽  
Loan Contracts ◽  
The Public ◽  
Bank Loan Contracts ◽  
Loan Size ◽  
The Impact ◽  
Policy Discussion

We investigated how a borrower’s adverse environmental, social, and governance incidents affect bank loan contracts. Using a sample of 2001 publicly traded US firms during the period from 2007 to 2016, we found that loans initiated after the occurrence of a firm’s environmental, social, or governance-related incident have a significantly higher spread and a lower loan size. Our sample contained firms covered by RepRisk, as RepRisk began tracking firms’ environmental, social, and governance-related incidents in January 2007. Further analysis showed that the influence on loan contracts is more pronounced in younger firms, which verifies that environmental, social, and governance-related incidents have significant influence and higher information asymmetry. In addition, a test of the timing of the environmental, social, and governance-related incidents in a year further strengthened our conclusions. Moreover, the impact of environmental, social, and governance-related incidents on loan contracts was also reflected in other non-monetary items, such as the duration of a loan contract, requests for collateral, and the frequency of covenants, as well as the lender structure. This paper adds to the discussion on the economic effects of environmental, social, and governance-related incidents on bank contracts. More broadly, our results contribute to the public policy discussion on the role banks should play in the transition to a low-carbon and sustainable economy.

Proprietary information and the cost of bank debt

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
HyunJun Na
Keyword(s):  
Least Square ◽  
Bank Loan ◽  
Content Type ◽  
Loan Contracts ◽  
Proprietary Information ◽  
Banking Deregulation ◽  
Interstate Banking ◽  
Innovative Firms ◽  
Bank Loan Contracts ◽  
The Impact

PurposeThis study explores how the firm’s proprietary information has an impact on the bank loan contracts. It explains the propensity of using the competitive bid option (CBO) in the syndicate loans to solicit the best bid for innovative firms and how it changes based on industry competition and the degree of innovations. This research also examines how the interstate banking deregulation (Interstate Banking and Branching Efficiency Act) in 1994 affected the private loan contracts for innovative borrowers.Design/methodology/approachThe study uses various econometric analyses. First, it uses the propensity score matching analysis to see the impact of patents on pricing terms. Second, it uses the two-stage least square (2SLS) analysis by implementing the litigation and non-NYSE variables. Finally, it studies the impact of the policy change of the Interstate Banking and Branching Efficiency Act of 1994 on the bank loan contracts.FindingsFirms with more proprietary information pays more annual facility fees but less other fees. The patents are the primary determinants of the usage of CBO in the syndicate loans to solicit the best bid. While innovative firms can have better contract conditions by the CBO, firms with more proprietary information will less likely to use the CBO option to minimize the leakage of private information and the severe monitoring from the banks. Finally, more proprietary information lowered the loan spread for firms dependent on the external capital after the interstate banking deregulation.Originality/valueThe findings of this research will help senior executives with responsibility for financing their innovative projects. In addition, these findings should prove helpful for the lawmakers to boost economies.

scholarly journals Portfolio management and appropriation of private benefits of control

2016 ◽  
Vol 1 (1) ◽  
pp. 20
Author(s):  
Elli Kraizberg
Keyword(s):  
Portfolio Management ◽  
Empirical Finding ◽  
Expected Returns ◽  
Minority Shareholders ◽  
Publicly Traded ◽  
Final Model ◽  
Public Firms ◽  
The Public ◽  
Portfolio Managers ◽  
The Impact

<p dir="LTR">In many countries around the globe, portfolio managers utilize well accepted models, assuming that a partial stake of ownership is proportionally valued. This assumption is incorrect  in markets in which traded firms or publicly held firms are controlled by major owners who would take any possible measure to protect and maintain a 'lock' on control, so they can secure a sellable asset to another control seeker. In this case, estimation of key parameters such as, volatility, expected returns and diversification effect, may be grossly distorted.</p><p dir="LTR">We would argue that a major trigger for the value of the benefits of control is the ability of control owners to transfer assets from their own portfolio to a controlled publicly traded firm. While it is obvious that these transfers will take place, if and only if, it is beneficial to the control owners, the impact on the minor shareholders may not necessarily be negative and may vary depending on several parameters. Thus, the benefits of control are not entirely "private", i.e. appropriation and diversion of the resources of publicly traded firms for the benefit of the control owners.     </p><p dir="LTR">This paper aims to model the effect of the benefits of control on the value of a minority held public firms. It focuses on two related issues that are discussed in the literature on the benefits of control: what drives the value of the benefits of control, given the   empirical evidence that control seekers are willing to pay a significant premium for control, and secondly, can these benefits be rationally modeled? To better understand these issues, it then models a specific drive on the part of control seekers who, in addition to their stake in a publicly traded firm, own a private portfolio. It could be argued that they may 'transfer' inferior investments to the public firms that they control exploiting less than perfect transparency. However, while they own this valuable option of 'transferring' inferior investments into the public firm, these actions may still be beneficial to the minority shareholders.</p><p dir="LTR">We establish a model and derive a simulation procedure that are applied to several cases in which transfers  are made in exchange for cash or equity, instances of full disclosure or partial transparency, the likelihood that the control owners' actions will be contested in court, level of risk, and other parameters. Then we will compare the results to empirical finding.  The final model will be greatly simplified so that the end formula can be easily used by practitioners. </p>

Private benefits of control and bank loan contracts

2018 ◽  
Vol 49 ◽  
pp. 324-343 ◽  
Author(s):  
Chih-Yung Lin ◽  
Wei-Che Tsai ◽  
Iftekhar Hasan ◽  
Le Quoc Tuan
Keyword(s):  
Bank Loan ◽  
Private Benefits ◽  
Private Benefits Of Control ◽  
Loan Contracts ◽  
Bank Loan Contracts

Can lenders discern managerial ability from luck? Evidence from bank loan contracts

2018 ◽  
Vol 87 ◽  
pp. 187-201 ◽  
Author(s):  
Dien Giau Bui ◽  
Yan-Shing Chen ◽  
Iftekhar Hasan ◽  
Chih-Yung Lin
Keyword(s):  
Bank Loan ◽  
Managerial Ability ◽  
Loan Contracts ◽  
Bank Loan Contracts

scholarly journals Apuntes para la gestión del turismo en España tras la crisis sanitaria de la Covid-19

2021 ◽  
Vol 19 (1) ◽  
pp. 189-194
Author(s):  
Patricia Arold Lario ◽  
Keyword(s):  
Urban Areas ◽  
Structural Changes ◽  
Economic Effects ◽  
Health Crisis ◽  
The Public ◽  
Mass Tourism ◽  
Public Health Crisis ◽  
Tourism Sector ◽  
Foreign Tourism ◽  
The Impact

The impact caused in the tourism sector by the public health crisis linked to coronavirus COVID‑19 and the need to protect the population from subsequent infection marks a necessary change in the model of tourism in coastal areas in Spain where mass tourism was the norm. Relevant reforms must be made to soften the economic effects of the drop in foreign tourism. In the case of cultural tourism in urban areas and inland, there is an en excellent opportunity to make structural changes in management that pre‑Covid was already experiencing serious problems. In this document we attempt to highlight the elements that may be key to future reform.

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