Are firm- and country-specific governance substitutes? : Evidence from financial contracts in emerging markets

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Title: Are firm- and country-specific governance substitutes? : Evidence from financial contracts in emerging markets
Author: Francis, Bill ; Hasan, Iftekhar ; Song, Liang
Organization: Bank of Finland
Series: Bank of Finland Research Discussion Papers
Series number: 12/2012
Year of publication: 2012
Publication date: 9.4.2012
Published in: Published in Journal of Financial Research, Volume 35, Issue 3, October 2012: 343-374
Pages: 57 s.
Keywords: kehittyvät markkinat; yritykset; johtaminen; valvonta; hallinto; vaikutukset; luotonanto; kustannukset; luotot; rahoitus; sopimukset; pankkitoiminta; lainaehdot
JEL: G20; G30; G31; G34; G38
Abstract: We investigate how borrowers corporate governance influences bank loan contracting terms in emerging markets and how this relation varies across countries with different country-level governance. We find that borrowers with stronger corporate governance obtain favorable contracting terms with respect to loan amount, maturity, collateral requirements, and spread. Firm-level and country-level corporate governance are substitutes in writing and enforcing financial contracts. We also find that the distinctiveness of borrowers characteristics affect the relation between firm-level corporate governance and loan contracting terms. Our findings are robust, irrespective of types of regression methods and specifications. JEL Classification: G20, G30, G31, G34, G38.
Note: Ilmestynyt myös Journal of Financial Research 35 ; 3 2012.
Rights: https://helda.helsinki.fi/bof/copyright


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