Bank Monitoring and Environmental Risk |
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| Authors: | Sebouh Aintablian Patricia A Mcgraw Gordon S Roberts |
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| Institution: | The authors are respectively from the Institute of Money and Banking, American University of Beirut, Lebanon;the Faculty of Management, Ryerson University, Toronto, Ontario, Canada;and the Schulich School of Business, York University Toronto, Ontario, Canada. |
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| Abstract: | Abstract: Loan announcement effects for 152 Canadian companies are examined to investigate the efficiency of monitoring by banks facing lender environmental liability. Market reaction to the announcement of bank debt to 'environmental' firms is more positive and significant than for 'non-environmental' firms and, for firms in industries with a higher likelihood of experiencing spill events, is more positive and significant, reinforcing earlier results that establish a relationship between specific loan/borrower characteristics and announcement period excess returns and providing further evidence on the 'uniqueness' of bank loans by demonstrating the superior ability of banks to monitor corporate borrowers exposed to environmental liability. |
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| Keywords: | bank loans lender environmental liability event study Canada |
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