Monitoring by Affiliated Bankers on Board of Directors: Evidence from Corporate Financing Outcomes |
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Authors: | Elif Sisli‐Ciamarra |
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Institution: | Elif Sisli‐Ciamarra is an Assistant Professor of Finance at the Brandeis International Business School in Waltham, MA. |
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Abstract: | Using a hand‐collected data set on boards of directors of large US nonfinancial companies, this paper investigates the effects of the presence of a creditor on a company's board. The results suggest that the presence of a creditor: 1) increases the amount of debt in a company's capital structure via an increase in private debt, 2) decreases the sensitivity of debt financing to the amount of tangible assets that a company holds, 3) decreases the cost of borrowing, and 4) reduces the pledge of collateral and financial covenants in debt contracts. |
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