Do Banks Price Owner-Manager Agency Costs? An Examination of Small Business Borrowing
Ang, Cole, and Lin (2000) provide evidence that supports the theoretical work of Jensen and Meckling (1976) on agency costs. As a further examination, I conduct a test to determine the economic significance of owner-manager agency conflicts. Using the same data source and empirical framework as Ang,...
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| Veröffentlicht in: | Journal of small business management 2002-10, Vol.40 (4), p.273-286 |
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| creator | Brau, James C. |
| description | Ang, Cole, and Lin (2000) provide evidence that supports the theoretical work of Jensen and Meckling (1976) on agency costs. As a further examination, I conduct a test to determine the economic significance of owner-manager agency conflicts. Using the same data source and empirical framework as Ang, Cole, and Lin (2000), I test to determine if banks charge a premium when extending loans to firms with various ownership structures. In empirical tests, I find that banks do not require an owner-manager agency premium either through increased interest rates or through the requirement of collateral. Instead, I find that the interest rate is significantly affected by the length of the longest banking relationship, the number of banking relationships, firm age, and firm size. Additionally, the requirement of collateral is significantly affected by the number of banking relationships, the debt position of the firm, and firm size. |
| doi_str_mv | 10.1111/1540-627X.00057 |
| format | Article |
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Instead, I find that the interest rate is significantly affected by the length of the longest banking relationship, the number of banking relationships, firm age, and firm size. 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An Examination of Small Business Borrowing</atitle><jtitle>Journal of small business management</jtitle><date>2002-10</date><risdate>2002</risdate><volume>40</volume><issue>4</issue><spage>273</spage><epage>286</epage><pages>273-286</pages><issn>0047-2778</issn><issn>0447-2778</issn><eissn>1540-627X</eissn><coden>JSBMAU</coden><abstract>Ang, Cole, and Lin (2000) provide evidence that supports the theoretical work of Jensen and Meckling (1976) on agency costs. As a further examination, I conduct a test to determine the economic significance of owner-manager agency conflicts. Using the same data source and empirical framework as Ang, Cole, and Lin (2000), I test to determine if banks charge a premium when extending loans to firms with various ownership structures. In empirical tests, I find that banks do not require an owner-manager agency premium either through increased interest rates or through the requirement of collateral. Instead, I find that the interest rate is significantly affected by the length of the longest banking relationship, the number of banking relationships, firm age, and firm size. Additionally, the requirement of collateral is significantly affected by the number of banking relationships, the debt position of the firm, and firm size.</abstract><cop>Boston, USA and Oxford, UK</cop><pub>Taylor & Francis</pub><doi>10.1111/1540-627X.00057</doi><tpages>14</tpages></addata></record> |
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| ispartof | Journal of small business management, 2002-10, Vol.40 (4), p.273-286 |
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| language | eng |
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| source | Wiley Online Library Journals Frontfile Complete; Business Source Complete |
| subjects | Banking Borrowing Collateral Commercial credit Costs Interest rates Investments Ownership Ratios Small business banking Small business loans Statistical analysis Stockholders Studies |
| title | Do Banks Price Owner-Manager Agency Costs? An Examination of Small Business Borrowing |
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