Managerial effect or firm effect : Evidence from the private debt market
Francis, Bill B.; Hasan, Iftekhar; Zhu, Yun (01.02.2020)
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Volyymi
55Numero
1 ; February
2020
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:bof-202002181119Tiivistelmä
This paper provides evidence that the managerial effect is a key determinant of firms’ cost of capital, in the context of private debt contracting. Applying the novel empirical method developed by an earlier study to a large sample that tracks the job movement of top managers, we find that the managerial effect is a critical and significant factor that explains a large part of the variation in loan contract terms more accurately than firm fixed effects. Additional evidence shows that banks “follow” managers when they change jobs and offer loan contracts with preferential terms to their new firms.
Julkaisuhuomautus
Published in BoF DP 29/2013.