Skip to Main Content
HBS Home
  • About
  • Academic Programs
  • Alumni
  • Faculty & Research
  • Baker Library
  • Giving
  • Harvard Business Review
  • Initiatives
  • News
  • Recruit
  • Map / Directions
Faculty & Research
  • Faculty
  • Research
  • Featured Topics
  • Academic Units
  • …→
  • Harvard Business School→
  • Faculty & Research→
Publications
Publications
  • April–May 2021
  • Article
  • Journal of Accounting & Economics

The Influence of Loan Officers on Loan Contract Design and Performance

By: Robert Bushman, Janet Gao, Xiumin Martin and Joseph Pacelli
  • Format:Print
ShareBar

Abstract

We investigate the extent to which loan officers generate independent, individual effects on the design and performance of syndicated loans. We construct a large database containing the identities of loan officers involved in structuring syndicated loan deals, allowing us to systematically disentangle borrower, bank, and loan officer fixed effects. We find that loan officers have significant influence on interest spreads, loan covenant design, and loan performance. Inclusion of borrower fixed effects increases our power to rule out the alternative that loan officer fixed effects reflect the matching of officers to borrowers based on time-invariant borrower characteristics. We document heterogeneity in loan officers’ influence across loan contract terms, with loan officers exerting stronger influence over covenant package design than over interest spreads, but marginal influence on loan maturity. Lead officers have greater influence than participant officers over covenant package design and loan performance, but less robust differential influence on interest spreads.

Keywords

Loan Officers; Covenants; Interest Spreads; Syndicated Loans; Banks and Banking; Financing and Loans; Design; Performance

Citation

Bushman, Robert, Janet Gao, Xiumin Martin, and Joseph Pacelli. "The Influence of Loan Officers on Loan Contract Design and Performance." Journal of Accounting & Economics 71, nos. 2-3 (April–May 2021).
  • Find it at Harvard
  • Read Now

About The Author

Joseph Pacelli

Accounting and Management
→More Publications

More from the Authors

    • October 2023
    • Faculty Research

    Accounting Red Flags or Red Herrings at Catalent?

    By: Joseph Pacelli, ZeSean Ali and Tom Quinn
    • October 2023
    • Faculty Research

    GameStop: Social Media Finds a Cheat Code

    By: Joseph Pacelli and Sarah Mehta
    • September 2023
    • Faculty Research

    The Rise and Fall of FTX

    By: Aiyesha Dey, Jonas Heese, Joseph Pacelli and Max Hancock
More from the Authors
  • Accounting Red Flags or Red Herrings at Catalent? By: Joseph Pacelli, ZeSean Ali and Tom Quinn
  • GameStop: Social Media Finds a Cheat Code By: Joseph Pacelli and Sarah Mehta
  • The Rise and Fall of FTX By: Aiyesha Dey, Jonas Heese, Joseph Pacelli and Max Hancock
ǁ
Campus Map
Harvard Business School
Soldiers Field
Boston, MA 02163
→Map & Directions
→More Contact Information
  • Make a Gift
  • Site Map
  • Jobs
  • Harvard University
  • Trademarks
  • Policies
  • Accessibility
  • Digital Accessibility
Copyright © President & Fellows of Harvard College