Akins, Brian
[Verfasser:in]
;
De Angelis, David
[Sonstige Person, Familie und Körperschaft];
Zufarov, Rustam
[Sonstige Person, Familie und Körperschaft]
Anmerkungen:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments November 15, 2020 erstellt
Beschreibung:
Change in control clauses are pervasive in loan contracts, yet their terms are not boilerplate. Examining 14,940 contracts, we document significant heterogeneity in the use and size of ownership caps, which limit large equity block formation. Lenders set lower caps to mitigate risks arising from activism, takeovers, within-syndicate coordination costs, and power contests among shareholders. We confirm some of these effects using two quasi-natural experiments. Caps below 50% are associated with a drop in firm value but not in the cost of debt, consistent with exacerbated firm-manager agency costs. Finally, two findings shed light on ways creditors may influence corporate governance: the largest block size increases when these minority block restrictions expire, and the likelihood of withdrawing an announced buyback increases during the life of these loans