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Corporate disclosure and financing arrangements: Evidence from syndicated loans in emerging markets

Iftekhar Hasan (Department of Finance, Fordham University, New York, New York, USA)
Liang Song (School of Business and Economics, Michigan Technological University, Houghton, Michigan, USA)
Meisong Zhan (Huazhong University of Science and Technology, Wuhan, China)
Peng Zhang (Department of Accounting, School of Management, Huazhong University of Science and Technology, Wuhan, China)
Zhaoguo Zhang (Huazhong University of Science and Technology, Wuhan, China)

Asian Review of Accounting

ISSN: 1321-7348

Article publication date: 17 July 2015

515

Abstract

Purpose

The purpose of this paper is to explore how firms’ disclosure standards influence the syndicated loan market, with an emphasis on loan syndicate structure and composition.

Design/methodology/approach

To empirically investigate the effects of corporate disclosure on bank loan syndicate structure and composition, the authors hand-match Dealscan, Worldscope, and other databases and construct a sample across 11 emerging markets.

Findings

The authors found that lead banks retain less ownership and form a less-concentrated loan syndicate when borrowers have superior disclosure policies. The authors also concluded that lead banks select more foreign participants in a loan syndicate and these members retain more ownership when borrowers have high disclosure rankings. Finally, the authors present evidence that the relationship between corporate disclosure and bank loan syndicates is more significant for firms with better governance.

Originality/value

The findings suggest that corporate disclosure has a significant influence on financing arrangements, even in a weak governance environment.

Keywords

Acknowledgements

JEL Classification —M41, G15, G24, G38

Dr Liang Song finished portions of this research when he was an assistant professor of accounting at University of Massachusetts Dartmouth and a visiting scholar at the Bank of Finland, Finland. This work was started as a part of Dr Liang Song’s dissertation for a PhD at Rensselaer Polytechnic Institute.

Citation

Hasan, I., Song, L., Zhan, M., Zhang, P. and Zhang, Z. (2015), "Corporate disclosure and financing arrangements: Evidence from syndicated loans in emerging markets", Asian Review of Accounting, Vol. 23 No. 2, pp. 139-155. https://doi.org/10.1108/ARA-01-2014-0020

Publisher

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Emerald Group Publishing Limited

Copyright © 2015, Emerald Group Publishing Limited

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