How Do Banks Charge on Loans to Firms with Insiders Borrowing from Banks with Share Pledges?

內部人股票質押與銀行貸款成本

10.6545/JFS.202306_31(2).0003

Yu-Chun Wang(王佑鈞)

Cost of bank loans ； share pledging ； 銀行貸款成本 ； 股票質押

財務金融學刊

31卷2期（2023 / 06 / 30）

61 - 92

英文;繁體中文

We examine the relation between insiders' share pledging and the cost of bank loans of Taiwanese listed firms. Specifically, we investigate whether banks charge firms different rates when the insiders pledge shares for their personal loans. We find that bank loan spreads are positively related to insiders' share pledging, especially for closely-held firms with controlling shareholders. The effects of insiders’ share pledging on bank loans are more prominent for non-syndicated loans (lower risk-sharing effect) and loans with shorter maturity (severer information problem), indicating that the risk engendered by share pledging is an important factor in bank loan contracting.

本研究發現內部人進行股票質押的公司承擔較高的銀行貸款成本，特別是對於有控制股東的所有權集中公司。股票質押對於銀行貸款成本的影響，尤其是在非聯貸案（風險分散效果較低）以及期限較短（資訊風險較高）的貸款案中較為顯著，表示銀行認為內部人股票質押對於銀行貸款案件來說是重要的風險因子。

1. Wang, Yung-Jang,Chen, Zhen-Jie(2011).The relationship between director and supervisor’s self-interest behavior and core agency problem.Journal of Financial Studies,19,1-39.
   連結：
2. Altman, Edward I.(1968).Financial ratios, discriminant analysis and the prediction of corporate bankruptcy.Journal of Finance,23,589-609.
3. Anderson, Ronald C.,Mansi, Sattar A. ,Reeb, David M.(2004).Board characteristics, accounting report integrity, and the cost of debt.Journal of Accounting and Economics,37,315-342.
4. Anderson, Ronald C.,Puleo, Michael(2020).Insider share-pledging and equity risk.Journal of Financial Services Research,58,1-25.
5. Bae, Kee-Hong,Goyal, Vidhan K.(2009).Creditor rights, enforcement, and bank loans.Journal of Finance,64,823-860.
6. Berger, Allen N.,Udell, Gregory F.(1995).Relationship lending and lines of credit in small firm finance.Journal of Business,68,351-381.
7. Bharath, Sreedhar T.,Sunder, Jayanthi ,Sunder, Shyam V.(2008).Accounting quality and debt contracting.Accounting Review,83,1-28.
8. Bhojraj, Sanjeev,Sengupta, Partha(2003).Effect of corporate governance on bond ratings and yields: The role of institutional investors and outside directors.Journal of Business,76,455-475.
9. Cassell, Cory A.,Huang, Shawn X. ,Sanchez, Juan Manuel ,Stuart, Michael D.(2012).Seeking safety: The relation between CEO inside debt holdings and the riskiness of firm investment and financial policies.Journal of Financial Economics,103,588-610.
10. Chan, Konan,Chen, Hung-Kun ,Hu, Shing-Yang ,Liu, Yu-Jane(2018).Share pledges and margin call pressure.Journal of Corporate Finance,52,96-117.
11. Chava, Sudheer,Livdan, Dmitry ,Purnanandam, Amiyatosh(2009).Do shareholder rights affect the cost of bank loans?.Review of Financial Studies,22,2973-3004.
12. Chen, Po-Chang(2016).Banks’ acquisition of private information about financial misreporting.Accounting Review,91,835-857.
13. Chen, Yan-Shing,Shen, Chung-Hua ,Lin, Chih-Yung(2014).The benefits of political connection: Evidence from individual bank-loan contracts.Journal of Financial Services Research,45,287-305.
14. Chou, Robin K.,Wang, Yu-Chun ,Yang, J. Jimmy(2021).Share pledging, payout policy, and the value of cash holdings.Journal of Empirical Finance,61,18-33.
15. Claessens, Stijn,Djankov, Simeon ,Lang, Larry H. P.(2000).The separation of ownership and control in East Asian corporations.Journal of Financial Economics,58,81-112.
16. Coles, Jeffrey L.,Daniel, Naveen D. ,Naveen, Lalitha(2006).Managerial incentives and risk-taking.Journal of Financial Economics,79,431-468.
17. Cortés, Janko H.,Tribó, Josep A. ,Adamuz, María de las Mercedes(2020).Are syndicated loans truly less expensive?.Journal of Banking and Finance,120,105942.
18. Cronqvist, Henrik,Makhija, Anil K. ,Yonker, Scott E.(2012).Behavioral consistency in corporate finance: CEO personal and corporate leverage.Journal of Financial Economics,103,20-40.
19. Cubbin, John,Leech, Dennis(1983).The effect of shareholding dispersion on the degree of control in British companies: Theory and measurement.Economic Journal,93,351-369.
20. DeJong, Douglas V., Ke Liao, and Deren Xie, 2020, Controlling shareholder’s share pledging and accounting manipulations, Working paper.
21. Demsetz, Rebecca S.(2000).Bank loan sales: A new look at the motivations for secondary market activity.Journal of Financial Research,23,197-222.
22. Dennis, Steven A.,Sharpe, Ian G.(2005).Firm size dependence in the determinants of bank term loan maturity.Journal of Business Finance and Accounting,32,31-64.
23. Diamond, Douglas W.(1984).Financial intermediation and delegated monitoring.Review of Economic Studies,51,393-414.
24. Dou, Ying,Masulis, Ronald W. ,Zein, Jason(2019).Shareholder wealth consequences of insider pledging of company stock as collateral for personal loans.Review of Financial Studies,32,4810-4854.
25. Ertugrul, Mine,Lei, Jin ,Qiu, Jiaping ,Wan, Chi(2017).Annual report readability, tone ambiguity, and the cost of borrowing.Journal of Financial and Quantitative Analysis,52,811-836.
26. Faccio, Mara,Marchica, Maria-Teresa ,Mura, Roberto(2011).Large shareholder diversification and corporate risk-taking.Review of Financial Studies,24,3601-3641.
27. Fan, Yaoyao,Jiang, Yuxiang ,Kao, Mao-Feng ,Liu, Hong Frank(2020).Board independence and firm value: A quasi-natural experiment using Taiwanese data.Journal of Empirical Finance,57,71-88.
28. Fields, L. Paige,Fraser, Donald R. ,Subrahmanyam, Avanidhar(2012).Board quality and the cost of debt capital: The case of bank loans.Journal of Banking and Finance,36,1536-1547.
29. Francis, Bill,Hasan, Iftekhar ,Koetter, Michael ,Wu, Qiang(2012).Corporate boards and bank loan contracting.Journal of Financial Research,35,521-552.
30. Francis, Bill,Hasan, Iftekhar ,Wu, Qiang(2013).The impact of CFO gender on bank loan contracting.Journal of Accounting, Auditing, and Finance,28,53-78.
31. Friedman, Eric,Johnson, Simon ,Mitton, Todd(2003).Propping and tunneling.Journal of Comparative Economics,31,732-750.
32. Graham, John R.,Li, Si ,Qiu, Jiaping(2008).Corporate misreporting and bank loan contracting.Journal of Financial Economics,89,44-61.
33. Guay, Wayne R.(1999).The sensitivity of CEO wealth to equity risk: An analysis of the magnitude and determinants.Journal of Financial Economics,53,43-71.
34. Hasan, Iftekhar,Hoi, Chun Keung ,Wu, Qiang ,Zhang, Hao(2014).Beauty is in the eye of the beholder: The effect of corporate tax avoidance on the cost of bank loans.Journal of Financial Economics,113,109-130.
35. Houston, Joel F.,Jiang, Liangliang ,Lin, Chen ,Ma, Yue(2014).Political connections and the cost of bank loans.Journal of Accounting Research,52,193-243.
36. John, Teresa A.,John, Kose(1993).Top-management compensation and capital structure.Journal of Finance,48,949-974.
37. Karavitis, Panagiotis,Kokas, Sotirios ,Tsoukas, Serafeim(2021).Gender board diversity and the cost of bank loans.Journal of Corporate Finance,71,101804.
38. La Porta, Rafael,Lopez-de-Silanes, Florencio ,Shleifer, Andrei(1999).Corporate ownership around the world.Journal of Finance,54,471-517.
39. Lee, Sang Whi,Mullineaux, Donald J.(2004).Monitoring, financial distress, and the structure of commercial lending syndicates.Financial Management,33,107-130.
40. Lee, Tsun-Siou,Yeh, Yin-Hua(2004).Corporate governance and financial distress: Evidence from Taiwan.Corporate Governance: An International Review,12,378-388.
41. Levine, Ross(2002).Bank-based or market-based financial systems: Which is better?.Journal of Financial Intermediation,11,398-428.
42. Li, Michelle,Liu, Chelsea ,Scott, Tom(2019).Share pledges and firm value.Pacific-Basin Finance Journal,55,192-205.
43. Li,Wanli,Zhou, Jingting ,Yan, Ziqiao ,Zhang, He(2020).Controlling shareholder share pledging and firm cash dividends.Emerging Markets Review,42,100671.
44. Lin, Chen,Ma, Yue ,Malatesta, Paul ,Xuan, Yuhai(2011).Ownership structure and the cost of corporate borrowing.Journal of Financial Economics,100,1-23.
45. Lin, Chih-Yung,Chen, Yehning ,Ho, Po-Hsin ,Yen, Ju-Fang(2020).CEO overconfidence and bank loan contracting.Journal of Corporate Finance,64,101637.
46. Meng, Qingbin, Xiaoran Ni, and Jinfan Zhang, 2019, Share pledging and corporate risk-taking: Insights from the Chinese stock market, Working paper.
47. Ouyang, Caiyue,Xiong, Jiacai ,Fan, Lyu(2019).Do insiders share pledging affect executive pay-for-performance sensitivity?.International Review of Economics and Finance,63,226-239.
48. Petersen, Mitchell A.(2009).Estimating standard errors in finance panel data sets: Comparing approaches.Review of Financial Studies,22,435-480.
49. Puleo, Michael,McDonald, Michael ,Kozlowski, Steven(2021).Share-pledging and the cost of debt.Accounting and Finance,61,1047-1079.
50. Rajgopal, Shivaram,Shevlin, Terry(2002).Empirical evidence on the relation between stock option compensation and risk taking.Journal of Accounting and Economics,33,145-171.
51. Shen, Chung-Hua,Lin, Chih-Yung,Wang, Yu-Chun(2015).Do strong corporate governance firms still require political connection, and vice versa?.International Review of Economics and Finance,39,107-120.
52. Shen, Yinjie,Wang, Wei ,Zhou, Fuzhao(2021).Insider pledging in the U.S..Journal of Financial Stability,53,100830.
53. Singh, Pranav P., 2018, The inside job: Share pledges by insiders and earnings management, Working paper.
54. Wang, Yu-Chun,Chou, Robin K.(2018).The impact of share pledging regulations on stock trading and firm valuation.Journal of Banking and Finance,89,1-13.
55. White, Halbert(1980).A heteroskedasticity-consistent covariance matrix estimator and a direct test for heteroskedasticity.Econometrica,48,817-838.
56. Zhao, Wanlong,Zhang, Wei ,Xiong, Xiong ,Zou, Gaofeng(2019).Share pledges, tone of earnings communication conferences, and market reaction: Evidence from China.Accounting and Finance,59,2817-2853.

1. (2024).Insider Share Pledging, Legislative Change, and Corporate Cash Holdings-Evidence from the Taiwan Stock Market.證券市場發展季刊,36(2),99-158.