Impact of ethical behavior on syndicated loan rates

The Effect of Environmental, Social and Governance Consistency on Economic Results

“…In particular, Thomson Reuters Asset4 structures the environmental dimension in three categories-resource reduction, emission reduction, and product innovation-the social dimension in seven categories-human rights, workforce opportunity, society and community, training and development, product responsibility, employment quality, and health and safety-and corporate governance dimension in five categories-vision and strategy, shareholder rights, board functions, board structure, and compensation policy. In line with previous research [47][48][49][50], this study uses the median as a measure of central tendency of performance which represents a group level indicator for each category in a given industry, country and year and allow identifying those firms that have strengths-if are over or equal the media. In this regard, Liden et al [47] used the median to explore the effects of leader-member exchange differentiation on individual and group performance.…”

“…In this regard, Liden et al [47] used the median to explore the effects of leader-member exchange differentiation on individual and group performance. Kim et al [48] defined the ethical behavior of borrowers and lenders depending whether the business ethics scores were above or below the median value of the distribution for the corresponding sector and year. Tang and Luo [49] measured the extent of the carbon pollution mitigation taking into account whether the firm's emissions intensity was lower than the median of its sector, since this measure is more comparable across firms than data based on absolute emissions.…”

The Effects of Corporate and Country Sustainability Characteristics on the Cost of Debt: An International Investigation

“…Our proxy for the cost of bank loans is the logarithm of the spread of the loan interest rate over LIBOR, adding any annual (or facility) fee paid to the lender (or lending group) and it is measured in basis points for each dollar drawn down. Based on related previous literature on the determinants of bank loans (Fields, Fraser and Subrahmanyam, 2012;Giannetti and Yafeh, 2012;Goss and Roberts, 2011;Kim, Surroca and Tribo, 2014;Nandy and Lodh, 2012) we draw a variety of information from DealScan concerning borrowing companies to construct our set of control variables: firm size (book value of total assets), ratio of market value of equity versus book value of equity, leverage (book value of total debt over book value of total equity), profitability (return on equity), interest coverage ratio (earnings before interests and taxes over interest expenses), firm liquidity (book value of current assets over book value of current liabilities), percentage of free floating shares, financial distress (Altman's Z-score) and R&D intensity (Research & Development expenses over total sales). We additionally collect the book value of total assets as a proxy for lender size (or the average of total assets when there are a multiple lenders in a syndicated loan) and the total loan maturity (in months) from DealScan.…”

“…Most notably, Kim, Surroca and Tribo (2014) also highlight the importance of trust in financial decisions, and lending in particular, and argue that it is dependent on two characteristics of the borrower, as perceived by the lender, namely integrity and benevolence (Howorth and Moro, 2012). They base their arguments and empirical investigation on the work of Mayer et al (1995) who define benevolence as "the extent to which a trustee is believed to want to do good to the trustor, aside from an egocentric profit motive" (p.718) and integrity as a concept which "involves the trustor's perception that the trustee adheres to a set of principles that the trustor finds acceptable" (p.719).…”

“…On the other hand, Nandy and Lodh (2012) As can be seen, previous studies on the effects of sustainability are restricted in terms of either geographic coverage (with Goss and Roberts (2011) and Nandy and Lodh (2012) focusing only in the US), or in the aspects of CSR they examine (Nandy and Lodh (2012) on environment, Kim et al (2014) on business ethics) or in the time-frame of their dataset (none goes beyond 2007 and thus they do not account for the possible influences of the global credit crisis on the investigated phenomenon). Our study aims to fill these gaps and, in addition, is, to the best of our knowledge, the first to also look into the effects of country sustainability on the cost of indirect corporate financing.…”