Creditor Control Rights and the Pricing of Private Loans
Type
conference poster
Date Issued
2022-01-07
Author(s)
Abstract
This paper investigates the influence of creditor control rights on the pricing and design of corporate loans. We construct a novel dataset, which combines individual borrower, lender, and loan characteristics with covenant violation data. The dataset contains observations, in which borrowers are in violation only with some of their multiple creditors. This data structure allows us to address the endogeneity concerns of the standard quasi-regression discontinuity design that uses covenant violations to identify shifts in creditor control rights. We find that creditors exploit their control rights to overprice new loans and tighten the loan conditions.
Language
English
Keywords
Loan Pricing
Creditor Governance
Corporate Governance
HSG Classification
contribution to scientific community
HSG Profile Area
None
Event Title
ASSA 2022 Virtual Annual Meeting
Event Location
USA
Event Date
7 - 9 January 2022
Subject(s)
Contact Email Address
nicola.kollmann@unisg.ch
Eprints ID
265107