Publications
Publications
- Review of Financial Studies
Credit and Punishment: Are Corporate Bankers Disciplined for Risk-Taking?
By: Janet Gao, Kristoph Kleiner and Joseph Pacelli
Abstract
We examine whether bankers face disciplining consequences for structuring poorly performing corporate loans. We construct a novel data set containing the employment histories and loan portfolios of a large sample of corporate bankers and find that corporate credit events (i.e., downgrades, defaults, bankruptcies) increase banker turnover. The effect is pronounced when bankers issue loans with loose terms or experience severe losses. Credit events prompt bankers to adopt stricter future risk management practices, such as offering restrictive covenant packages. Overall, our findings are consistent with banks disciplining employees as a means to manage their own risk exposure.
Keywords
Syndicated Loans; Credit Events; Career Outcomes; Loan Officers; Banks and Banking; Financing and Loans; Risk Management; Corporate Finance; Personal Development and Career
Citation
Gao, Janet, Kristoph Kleiner, and Joseph Pacelli. "Credit and Punishment: Are Corporate Bankers Disciplined for Risk-Taking?" Review of Financial Studies 33, no. 12 (December 2020): 5706–5749.
About The Author
