Zhenyu Hu

Publication Date

6-15-2021

Document Type

Dissertation

Degree Name

Doctor of Philosophy in International Business Administration (Ph.D.-IB)

Committee Member

Rodriguez, Antonio J.

Committee Member

Clarke, George R.G.

Committee Member

Chang, Jui-Chin

Abstract

Syndicated loans have become common around the world and are used frequently for various corporate purposes. The growth of syndicated loans has been phenomenal. This dissertation explores topics on syndicated loan market.The first chapter examines how firm’s corporate social responsibilities affect syndicated loan structure. Using two different measures of syndicate structure (proxies by lead bank share and Herfindahl-Hirschman index (HHI)) and corporate social responsibility (CSR) score as our main independent variable, I find loan syndicates are less concentrated when the borrower is more socially responsible. Specifically, a one standard deviation increase in the CSR score is associated with a 0.06 standard deviation decrease in the lead lender share. The results are robust to using an instrumental variable and alternative CSR measurements. The second chapter provides new evidence on the role of physical distance between bank and bank regulator in syndicated loan structure. The geographical distance is used as a proxy of the information asymmetry and the cost of soft information collection in literature. A shorter lender-regulator distance indicates a more effective regulator supervision on lenders because of reduced information asymmetries between lenders andregulators. My results provide evidence on how the lender-regulator distance affect syndicated loan structure. Specifically, a one standard deviation increase in the lender-regulator distance is associated with a 0.08 standard deviation increase in the lead lender share. That is, syndicated loan structure is less concentrated as lead banks get closer to the regulator. The third chapter examines whether borrowers manipulate 10-K report readability before receiving syndicated loans to gain bargaining power. I find that firms’ 10-K report file size is 5.9% larger one year before receiving syndicated loan. But only poorly performing firms do so, better performing firms make their reports easier to read. One example for this manipulation is that poorly performing firms want to hide their poor performance, while superior performing firms seek to highlight their performance.

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