Abstract
We demonstrate that banks play an important monitoring role in CEO succession that is not observed for other types of lenders, particularly public bondholders. There is a stronger relation between cash flow performance and forced CEO turnover for firms issuing bank debt during the year of CEO turnover than for firms not issuing bank debt, and bank debt issuance increases the likelihood of external CEO succession. The stock price reaction to CEO succession is higher when bank monitoring is prevalent. Our results are consistent with theories of relationship banking that propose a valuable monitoring role for well informed, incentivized bank lenders.
| Original language | English |
|---|---|
| Publication status | Published - 2012 |
| Event | Financial Engineering and Banking Society - London, United Kingdom Duration: 7 Jun 2012 → 8 Jun 2012 |
Conference
| Conference | Financial Engineering and Banking Society |
|---|---|
| Country/Territory | United Kingdom |
| City | London |
| Period | 7/06/12 → 8/06/12 |
Keywords
- bank debt
- external succession
- lender monitoring
- CEO succession