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- Title
ARE FIRM- AND COUNTRY-SPECIFIC GOVERNANCE SUBSTITUTES? EVIDENCE FROM FINANCIAL CONTRACTS IN EMERGING MARKETS.
- Authors
Francis, Bill; Hasan, Iftekhar; Song, Liang
- 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.
- Subjects
CONTRACTS; EMERGING markets; CORPORATE governance; COLLATERAL security; REGRESSION analysis; TECHNICAL specifications; FINANCE
- Publication
Journal of Financial Research, 2012, Vol 35, Issue 3, p343
- ISSN
0270-2592
- Publication type
Article
- DOI
10.1111/j.1475-6803.2012.01320.x