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Article: Corporate ownership structure and the choice between bank debt and public debt

TitleCorporate ownership structure and the choice between bank debt and public debt
Authors
KeywordsOwnership structure
Excess control rights
Bank Debt
Public Debt
Issue Date2013
PublisherElsevier. The Journal's web site is located at http://www.sciencedirect.com/science/journal/0304405X
Citation
Journal of Financial Economics, 2013, v. 109 n. 2, p. 517-534 How to Cite?
AbstractThis article examines the relation between a borrowing firm's ownership structure and its choice of debt source using a novel data set on corporate ownership, control, and debt structures for 9,831 firms in 20 countries from 2001 to 2010. We find that the divergence between the control rights and cash-flow rights of a borrowing firm's largest ultimate owner has a significant negative impact on the firm's reliance on bank debt financing. In addition, we show that the control-ownership divergence affects other aspects of debt structure including debt maturity and security. Our results indicate that firms controlled by large shareholders with excess control rights may choose public debt financing over bank debt as a way of avoiding scrutiny and insulating themselves from bank monitoring.
Persistent Identifierhttp://hdl.handle.net/10722/192346
ISSN
2015 Impact Factor: 3.541
2015 SCImago Journal Rankings: 9.920
ISI Accession Number ID

 

DC FieldValueLanguage
dc.contributor.authorLin, Cen_US
dc.contributor.authorMa, Yen_US
dc.contributor.authorMalatesta, Pen_US
dc.contributor.authorXuan, Yen_US
dc.date.accessioned2013-10-24T01:50:06Z-
dc.date.available2013-10-24T01:50:06Z-
dc.date.issued2013en_US
dc.identifier.citationJournal of Financial Economics, 2013, v. 109 n. 2, p. 517-534en_US
dc.identifier.issn0304-405Xen_US
dc.identifier.urihttp://hdl.handle.net/10722/192346-
dc.description.abstractThis article examines the relation between a borrowing firm's ownership structure and its choice of debt source using a novel data set on corporate ownership, control, and debt structures for 9,831 firms in 20 countries from 2001 to 2010. We find that the divergence between the control rights and cash-flow rights of a borrowing firm's largest ultimate owner has a significant negative impact on the firm's reliance on bank debt financing. In addition, we show that the control-ownership divergence affects other aspects of debt structure including debt maturity and security. Our results indicate that firms controlled by large shareholders with excess control rights may choose public debt financing over bank debt as a way of avoiding scrutiny and insulating themselves from bank monitoring.-
dc.languageengen_US
dc.publisherElsevier. The Journal's web site is located at http://www.sciencedirect.com/science/journal/0304405X-
dc.relation.ispartofJournal of Financial Economicsen_US
dc.rightsCreative Commons: Attribution 3.0 Hong Kong License-
dc.rightsNOTICE: this is the author’s version of a work that was accepted for publication in Journal of Financial Economics. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in PUBLICATION, [VOL 109, ISSUE 2, (2013)] DOI 10.1016/j.jfineco.2013.03.006-
dc.subjectOwnership structure-
dc.subjectExcess control rights-
dc.subjectBank Debt-
dc.subjectPublic Debt-
dc.titleCorporate ownership structure and the choice between bank debt and public debten_US
dc.typeArticleen_US
dc.description.naturepostprint-
dc.identifier.doi10.1016/j.jfineco.2013.03.006en_US
dc.identifier.scopuseid_2-s2.0-84878979206en_US
dc.identifier.hkuros239454-
dc.identifier.volume109en_US
dc.identifier.issue2en_US
dc.identifier.spage517en_US
dc.identifier.epage534en_US
dc.identifier.isiWOS:000321029000011-

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