Journal of Accounting and Economics Vol. 67 No. 2-3 2019
The effect of banks’ financial reporting on syndicated-loan structures
Abstract
We explore how an accounting measure of information asymmetry between lead and participating lenders influences syndication structures by examining whether lead lenders’ commercial and industrial (C&I) loan-loss provision validity affects the fraction of loans they retain. We first conduct multiple tests showing that C&I provision validity reflects banks’ underlying screening and monitoring effectiveness. We then find lead lenders’ loan share decreases with C&I provision validity, but not with non-C&I provision validity. Consistent with an information effect, we further find this association is attenuated by (i) alternative information sources about the borrowers and (ii) previous lead/participant relationships and participant/borrower relationships.
- DOI
- 10.1016/j.jacceco.2019.01.002
- Volume
- 67
- Issue
- 2-3
- Pages
- 496-520
- Language
- en
- Sources
- openalex crossref bibtex:phds-export.bib