Corporate disclosure and financing arrangements

Purpose - – The purpose of this paper is to explore how firms’ disclosure standards influence the syndicated loan market, with an emphasis on loan syndicate structure and composition. Design/methodology/approach - – To empirically investigate the effects of corporate disclosure on bank loan syndicate structure and composition, the authors hand-match Dealscan, Worldscope, and other databases and construct a sample across 11 emerging markets. Findings - – The authors found that lead banks retain less ownership and form a less-concentrated loan syndicate when borrowers have superior disclosure policies. The authors also concluded that lead banks select more foreign participants in a loan syndicate and these members retain more ownership when borrowers have high disclosure rankings. Finally, the authors present evidence that the relationship between corporate disclosure and bank loan syndicates is more significant for firms with better governance. Originality/value - – The findings suggest that corporate disclosure has a significant influence on financing arrangements, even in a weak governance environment.