We examine the hypothesis that firm size affects the sensitivity of bank term loan maturity to its underlying determinants. As borrower size increases, negotiating power with the lender and information transparency increase, while the lender is able to spread the fixed costs of loan production across a larger dollar value of the loan. We find strong evidence of firm size dependency in the determinants of bank term loan maturity and show that this is unrelated to syndication. Only large borrowers can manipulate bank loan contract terms so as to increase firm value.
| Identifer | oai:union.ndltd.org:ETSU/oai:dc.etsu.edu:etsu-works-19834 |
| Date | 01 January 2005 |
| Creators | Dennis, Steven A., Sharpe, Ian G. |
| Publisher | Digital Commons @ East Tennessee State University |
| Source Sets | East Tennessee State University |
| Detected Language | English |
| Type | text |
| Source | ETSU Faculty Works |
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