Year: 2022
Type: article
Abstract: This paper studies the effect of top management team (TMT) network centrality on bank loan contracts. We show that firms with high TMT network centrality obtain bank loans with lower loan spreads, longer loan maturity, and fewer collateral requirements. In addition, we consider the channels by which TMT network centrality influences loan spreads, because loan pricing is the key component in a loan contract that is largely based on risk. By using some proxy variables, we find that interlocking networks affect loan spreads by reducing agency costs, alleviating information asymmetry, expanding resource channels, and enhancing the reputation of companies. This paper expands the research on the economic consequences of interlocking networks and provides empirical evidence for capital markets regulation in emerging markets.
DOI: 10.2139/ssrn.4292920
Authors: Meiting Wu, Zuo Ping Xiao, Mo Yang
Institutions: Hangzhou Dianzi University, Southwest Jiaotong University
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: diamond
OpenAlex ID: W4409621655