Do Better Managers Get Better Loan Contracts?

Bill B. Francis, Ning Ren, Xian Sun, Qiang Wu

Research output: Journal article publicationJournal articleAcademic researchpeer-review


This paper examines the impact of managerial ability on bank loan contracting. We find that firms with higher-ability managers obtain more favourable loan contract terms, including lower loan spreads, fewer covenants, and more short-term maturities. Furthermore, the negative relation between managerial ability and loan spread is concentrated in firms with higher information asymmetry, higher default risk, or lower agency costs of debt. Finally, we find that firms with higher-ability managers are more likely to choose public bonds over bank loans.

Original languageEnglish
Publication statusAccepted/In press - 2024


  • Agency costs of debt
  • Bank loan contracting
  • Default risk
  • Information opacity
  • Managerial ability

ASJC Scopus subject areas

  • Accounting


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