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• Article | Journal of Financial Economics | April 2012

  Corporate Ownership Structure and Bank Loan Syndicate Structure

  Chen Lin, Yue Ma, Paul Malatesta and Yuhai Xuan

  Using a novel data set on corporate ownership and control, we show that the divergence between the control rights and cash-flow rights of a borrowing firm's largest ultimate owner has a significant impact on the concentration and composition of the firm's loan syndicate. When the control-ownership divergence is large, lead arrangers form syndicates with structures that facilitate enhanced due diligence and monitoring efforts. These syndicates tend to be relatively concentrated and composed of domestic banks that are geographically close to the borrowing firms and that have lending expertise related to the industries of the borrowers. We also examine factors that influence the relation between ownership structure and syndicate structure, including lead arranger reputation, prior lending relationship, borrowing firm informational opacity, presence of multiple large owners, laws and institutions, and financial crises.

  Keywords: Ownership; Financing and Loans; Cash Flow; Borrowing and Debt; Accounting; Crisis Management; Relationships; Law; Contracts; Banking Industry;

  Citation:

  Lin, Chen, Yue Ma, Paul Malatesta, and Yuhai Xuan. "Corporate Ownership Structure and Bank Loan Syndicate Structure." Journal of Financial Economics 104, no. 1 (April 2012): 1–22. (Lead Article.)

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• Case | HBS Case Collection | 2012 (Revised from original 2009 version)

  Steel Street

  Arthur I Segel, William J. Poorvu, Ben Creo and Justin Seth Ginsburgh

  The case involves repositioning an old 6-story warehouse in Pittsburgh and many of the issues of rehabilitation and selecting and managing the development team especially in a world of capital market uncertainty. The case also demonstrates the alignment of interests of the players, the construction process, and the various methods available to contract with the general contractor including lump sum, cost-plus, and guaranteed maximum price.

  Keywords: Construction; Capital Markets; Financial Management; Investment; Property; Urban Development; Real Estate Industry; Pittsburgh;

  Citation:

  Segel, Arthur I., William J. Poorvu, Ben Creo, and Justin Seth Ginsburgh. "Steel Street." Harvard Business School Case 210-010, January 2012. (Revised from original August 2009 version.)

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• Article | Journal of Financial Economics | November 2011

  Ownership Structure and Financial Constraints: Evidence from a Structural Estimation

  Chen Lin, Yue Ma and Yuhai Xuan

  This article examines the impact of the divergence between corporate insiders' control rights and cash-flow rights on firms' external finance constraints via generalized method of moments estimation of an investment Euler equation.  Using a large sample of U.S. firms during the 1994-2002 period, we find that the shadow value of external funds is significantly higher for companies with a wider insider control-ownership divergence, suggesting that companies whose corporate insiders have larger excess control rights are more financially constrained. The effect of insider excess control rights on external finance constraints is more pronounced for firms with higher degrees of informational opacity and for firms with financial misreporting, and is moderated by institutional ownership. The results suggest that the agency problems associated with the control-ownership divergence can have a real impact on corporate financial and investment outcomes.

  Keywords: Ownership; Social Enterprise; Reputation; Cash Flow; Annuities; Investment; Investment Funds; Financial Reporting; Accounting Audits; Financial Services Industry; United States;

  Citation:

  Lin, Chen, Yue Ma, and Yuhai Xuan. "Ownership Structure and Financial Constraints: Evidence from a Structural Estimation." Journal of Financial Economics 102, no. 2 (November 2011): 416–431.

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