Back to Search
Start Over
CEO Turnover, Information Uncertainty, and Debt Contracting
- Source :
- SSRN Electronic Journal.
- Publication Year :
- 2016
- Publisher :
- Elsevier BV, 2016.
-
Abstract
- We examine how CEO turnover and changes in information uncertainty affect the price and non-price terms of bank loan contracts. Firms face worsened loan terms following the departure of a CEO. Interestingly, the negative effect that CEO departures have on loan terms largely stems from forced CEO turnovers. Following forced CEO departures, firms pay higher loan spreads, see an increase in covenants, and are more likely to be subject to collateral requirements, when compared to voluntary turnover and non-turnover matched firms. We find that changes in information uncertainty helps to explain the observed worsened terms following these dismissals. Furthermore, a superior capital market information environment helps to mitigate the adverse effect of the forced departure on bank loan terms and weakens the channel effect of accounting information quality. Our results are robust to a number of controls for endogeneity and outline the importance of public information for bank loan contracting.
- Subjects :
- Economics and Econometrics
Collateral
Financial economics
Strategy and Management
media_common.quotation_subject
education
Monetary economics
GeneralLiterature_MISCELLANEOUS
Debt
0502 economics and business
Quality (business)
Endogeneity
health care economics and organizations
media_common
040101 forestry
050208 finance
ComputingMilieux_THECOMPUTINGPROFESSION
05 social sciences
04 agricultural and veterinary sciences
ComputingMilieux_MANAGEMENTOFCOMPUTINGANDINFORMATIONSYSTEMS
Loan
Accounting information system
0401 agriculture, forestry, and fisheries
Business
Non-performing loan
Capital market
Finance
Subjects
Details
- ISSN :
- 15565068
- Database :
- OpenAIRE
- Journal :
- SSRN Electronic Journal
- Accession number :
- edsair.doi.dedup.....fe11e50cee830d4c52c740d0bd85a510