Do banks really monitor? Evidence from CEO succession decisions

Marshall, Andrew and McCann, Laura and McColgan, Patrick (2014) Do banks really monitor? Evidence from CEO succession decisions. Journal of Banking and Finance, 46. pp. 118-131. ISSN 0378-4266 (https://doi.org/10.1016/j.jbankfin.2014.05.017)

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Abstract

We demonstrate that banks play an important monitoring role in CEO succession that is not observed for other types of lenders, particularly public bondholders. There is a stronger relation between cash flow performance and forced CEO turnover for firms issuing bank debt during the year of CEO turnover than for firms not issuing bank debt, and bank debt issuance increases the likelihood of external CEO succession. The stock price reaction to CEO succession is higher when bank monitoring is prevalent. Our results are consistent with theories of relationship banking that propose a valuable monitoring role for well informed, incentivized bank lenders.

ORCID iDs

Marshall, Andrew ORCID logoORCID: https://orcid.org/0000-0001-7081-1296, McCann, Laura and McColgan, Patrick ORCID logoORCID: https://orcid.org/0000-0002-7980-6175;
  • Item type:Article
    ID code:50159
    Dates:
    Date
    Event
    30 September 2014
    Published
    29 May 2014
    Published Online
    16 May 2014
    Accepted
    Notes:NOTICE: this is the author’s version of a work that was accepted for publication in Journal of Banking and Finance. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Journal of Banking and Finance, [VOL 46, (29/05/14)] DOI: 10.1016/j.jbankfin.2014.05.017
    Subjects:Social Sciences > Finance
    Social Sciences > Commerce > Accounting
    Department:Strathclyde Business School > Accounting and Finance
    Depositing user: Pure Administrator
    Date deposited:05 Nov 2014 14:21
    Last modified:11 Nov 2024 10:50
    URI:https://strathprints.strath.ac.uk/id/eprint/50159
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