Ownership structure and the cost of corporate borrowing
This article identifies an important channel through which excess control rights affect firm value. Using a new, hand-collected data set on corporate ownership and control of 3,468 firms in 22 countries during the 1996–2008 period, we find that the cost of debt financing is significantly higher for...
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| Veröffentlicht in: | Journal of financial economics 2011-04, Vol.100 (1), p.1-23 |
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| container_end_page | 23 |
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| container_issue | 1 |
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| container_title | Journal of financial economics |
| container_volume | 100 |
| creator | Lin, Chen Ma, Yue Malatesta, Paul Xuan, Yuhai |
| description | This article identifies an important channel through which excess control rights affect firm value. Using a new, hand-collected data set on corporate ownership and control of 3,468 firms in 22 countries during the 1996–2008 period, we find that the cost of debt financing is significantly higher for companies with a wider divergence between the largest ultimate owner’s control rights and cash-flow rights and investigate factors that affect this relation. Our results suggest that potential tunneling and other moral hazard activities by large shareholders are facilitated by their excess control rights. These activities increase the monitoring costs and the credit risk faced by banks and, in turn, raise the cost of debt for the borrower. |
| doi_str_mv | 10.1016/j.jfineco.2010.10.012 |
| format | Article |
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These activities increase the monitoring costs and the credit risk faced by banks and, in turn, raise the cost of debt for the borrower.</description><subject>Bank loans</subject><subject>Business ownership</subject><subject>Cash flow</subject><subject>Control-ownership wedge</subject><subject>Corporate debt</subject><subject>Cost of debt</subject><subject>Credit</subject><subject>Credit risk</subject><subject>Debt financing</subject><subject>Discriminant analysis</subject><subject>Excess control rights</subject><subject>Moral hazard</subject><subject>Ownership</subject><subject>Ownership structure</subject><subject>Ownership structure Excess control rights Control-ownership wedge Cost of debt Bank loans</subject><subject>Risk</subject><subject>Studies</subject><issn>0304-405X</issn><issn>1879-2774</issn><fulltext>true</fulltext><rsrctype>article</rsrctype><creationdate>2011</creationdate><recordtype>article</recordtype><sourceid>X2L</sourceid><recordid>eNqFUMFq3DAUFKGFbLf5hIDppSdvnyRbsk6lhCYbCOTSQm5Clp-zMruWK8kJ-ftq10sOvVTwNDBvZngMIdcUNhSo-DZsht6NaP2GwYnbAGUXZEUbqUomZfWBrIBDVVZQP12STzEOkJ-s1YrIx9cRQ9y5qYgpzDbNAQszdkXaYWF9TIXvM4bJB5OwaH0I_tWNz5_Jx97sI16dcU1-3_78dbMtHx7v7m9-PJRWgEolArSCd4ZyUasWasl6icKqvlGd7AXHtmVYWVE1BoTCGkCphovW5CVIZHxNvi65U_B_ZoxJH1y0uN-bEf0cdVNLyhjnKiu__KMc_BzGfFwWQVUplpPXpF5ENvgYA_Z6Cu5gwpumoI9l6kGfy9THMo90LjP7tosv4IT23YSIi1q_aG4oQP7f8mQrzeCOZJ7phIzrXTrkqO9LFObaXhwGHa3D0WLnAtqkO-_-c8xfCnWXgA</recordid><startdate>20110401</startdate><enddate>20110401</enddate><creator>Lin, Chen</creator><creator>Ma, Yue</creator><creator>Malatesta, Paul</creator><creator>Xuan, Yuhai</creator><general>Elsevier B.V</general><general>Elsevier</general><general>Elsevier Sequoia S.A</general><scope>DKI</scope><scope>X2L</scope><scope>AAYXX</scope><scope>CITATION</scope><scope>8BJ</scope><scope>FQK</scope><scope>JBE</scope></search><sort><creationdate>20110401</creationdate><title>Ownership structure and the cost of corporate borrowing</title><author>Lin, Chen ; Ma, Yue ; Malatesta, Paul ; Xuan, Yuhai</author></sort><facets><frbrtype>5</frbrtype><frbrgroupid>cdi_FETCH-LOGICAL-c609t-e00b63da13659b0572f7e6c9f89d7f63ebb2e4c648a069e50099836ba7f607e23</frbrgroupid><rsrctype>articles</rsrctype><prefilter>articles</prefilter><language>eng</language><creationdate>2011</creationdate><topic>Bank loans</topic><topic>Business ownership</topic><topic>Cash flow</topic><topic>Control-ownership wedge</topic><topic>Corporate debt</topic><topic>Cost of debt</topic><topic>Credit</topic><topic>Credit risk</topic><topic>Debt financing</topic><topic>Discriminant analysis</topic><topic>Excess control rights</topic><topic>Moral hazard</topic><topic>Ownership</topic><topic>Ownership structure</topic><topic>Ownership structure Excess control rights Control-ownership wedge Cost of debt Bank loans</topic><topic>Risk</topic><topic>Studies</topic><toplevel>peer_reviewed</toplevel><toplevel>online_resources</toplevel><creatorcontrib>Lin, Chen</creatorcontrib><creatorcontrib>Ma, Yue</creatorcontrib><creatorcontrib>Malatesta, Paul</creatorcontrib><creatorcontrib>Xuan, Yuhai</creatorcontrib><collection>RePEc IDEAS</collection><collection>RePEc</collection><collection>CrossRef</collection><collection>International Bibliography of the Social Sciences (IBSS)</collection><collection>International Bibliography of the Social Sciences</collection><collection>International Bibliography of the Social Sciences</collection><jtitle>Journal of financial economics</jtitle></facets><delivery><delcategory>Remote Search Resource</delcategory><fulltext>fulltext</fulltext></delivery><addata><au>Lin, Chen</au><au>Ma, Yue</au><au>Malatesta, Paul</au><au>Xuan, Yuhai</au><format>journal</format><genre>article</genre><ristype>JOUR</ristype><atitle>Ownership structure and the cost of corporate borrowing</atitle><jtitle>Journal of financial economics</jtitle><date>2011-04-01</date><risdate>2011</risdate><volume>100</volume><issue>1</issue><spage>1</spage><epage>23</epage><pages>1-23</pages><issn>0304-405X</issn><eissn>1879-2774</eissn><coden>JFECDT</coden><abstract>This article identifies an important channel through which excess control rights affect firm value. 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| fulltext | fulltext |
| identifier | ISSN: 0304-405X |
| ispartof | Journal of financial economics, 2011-04, Vol.100 (1), p.1-23 |
| issn | 0304-405X 1879-2774 |
| language | eng |
| recordid | cdi_proquest_miscellaneous_857122339 |
| source | RePEc; ScienceDirect Journals (5 years ago - present) |
| subjects | Bank loans Business ownership Cash flow Control-ownership wedge Corporate debt Cost of debt Credit Credit risk Debt financing Discriminant analysis Excess control rights Moral hazard Ownership Ownership structure Ownership structure Excess control rights Control-ownership wedge Cost of debt Bank loans Risk Studies |
| title | Ownership structure and the cost of corporate borrowing |
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