Journal article
Bank loan contracting and corporate diversification: Does organizational structure matter to lenders?
Abstract
This paper investigates the effect of corporate diversification on the pricing of bank-loan contracts. We find that diversified firms have significantly lower loan rates than comparable focused firms, and we find no evidence that diversified firms are subject to more restrictive non-price contract terms pertaining to maturity, collateral requirements, and covenant restrictions. We show that the effect of diversification on the cost of a bank …
Authors
Aivazian VA; Qiu J; Rahaman MM
Journal
Journal of Financial Intermediation, Vol. 24, No. 2, pp. 252–282
Publisher
Elsevier
Publication Date
April 2015
DOI
10.1016/j.jfi.2015.02.002
ISSN
1042-9573