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Creditor Control Rights and the Pricing of Private Loans

Type
conference speech
Author(s)
Arnold, Marc  orcid-logo
Kollmann, Nicola  
Tengulov, Angel  
Abstract (De)
This paper investigates the influence of creditor control rights on the pricing of corporate loans. We construct a novel dataset, which combines hand-collected covenant violations data with individual borrower, creditor, and loan contract information. Our data allows us to distinguish between creditors that receive direct control rights after a covenant violation and creditors that do not receive control rights after a violation. By comparing the loan terms of these two creditor types, we can isolate the impact of creditor control rights on loan pricing from the impact of other factors related to a covenant violation. We find that creditors exploit control rights to overprice new loans, and that this rent extraction is a key determinant of the loan premium puzzle.
Language
English
Event Title
SFI Research Days 2022 - Swiss Finance Institute
Event Location
Studienzentrum Gerzensee
Event Date
13.-14. Juni 2022
URL
https://www.alexandria.unisg.ch/handle/20.500.14171/117005
Subject(s)

finance

Division(s)

SBF - Swiss Institute...

ACA - Institute of Ac...

Eprints ID
267971

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