o Time : June 02, Friday 12:00 ~ 2:00 p.m.

o Venue : 9705(The 7th floor seminar room)


Agency Conflicts, Financial Distress, and Syndicate Structure: Evidence from Japanese Borrowers


-Abstract

We examine how borrower firm characteristics affect the size structure in the Japanese syndicated loan market for the 1999-2003 period. Consistent with the view by Lee and Mullineaux (2004), we find that syndicates are Smaller when borrowers have higher credit risk, while firms with greater information asymmetry are associated with larger syndicates in Japan. These results are primarily driven by non-keiretsu(non-business group) firms. This suggests that the role of enhanced monitoring and facilitated renegotiation is especially useful for banks participating in Japanese syndicated loan for non-keiretsu firms. On the other hand, information problems seem to be less severe for keiretsu(business group) firms which tend to have easier access to syndicated loan via the intermediation of in-house banks in the relevant syndicate. Finally, Keiretsu firms have less fraction of loan by the agent bank as the maturity rises, while non-keiretsu firms have greater fraction of 1oan by the agent bank as the maturity rises. It appears that main banks of keiretsu firms with informationa1 advantage are forced to retain more of the loan and form a more concentrated syndicate to ” signal ” that the 1oan is of high quality- This further confirms the view that information problems are less severe in the keiretsu firms.