CEO deaths and credit relationships: evidence from an emerging market

In a sample representing 40% of Peru’s formal economy, firms shocked by the death of their chief executive officer experience lower sales and a higher probability of exit, lower borrowing amounts and credit performance, and a reduced number of lenders compared with very similar firms. Existing lende...

Full description

Saved in:
Bibliographic Details
Published in:Journal of law, economics, & organization economics, & organization, 2024-11
Main Author: Natividad, Gabriel
Format: Article
Language:English
Citations: Items that this one cites
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:In a sample representing 40% of Peru’s formal economy, firms shocked by the death of their chief executive officer experience lower sales and a higher probability of exit, lower borrowing amounts and credit performance, and a reduced number of lenders compared with very similar firms. Existing lenders bear the negative consequences. Monthly risk assessments by lenders worsen immediately after the death events. The negative effects are observed across various firm sizes, while industry characteristics, incorporation, and family ties are relevant dimensions of heterogeneity. Lenders with a longer relationship history, and those less constrained for loan-making, protect themselves by introducing collateral clauses. (JEL D25, G30, L25).
ISSN:8756-6222
1465-7341
DOI:10.1093/jleo/ewae027