Agency cost of CEO perquisites in bank loan contracts

Chia Ying Chan, Iftekhar Hasan, Chih-Yung Lin*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

2 Scopus citations


This study investigates the association between CEO perquisites and bank loan spreads. We collect detailed data on CEO perquisites from the proxy statements of S&P 500 firms between 1993 and 2015 to study this issue. The empirical evidence supports the agency cost view that the lending banks demand significantly higher returns (spread), more collateral, and stricter covenants from firms with higher CEO perquisites. We further confirm that the effect of these perquisites remains after we control for various corporate governance and agency cost factors. We conclude that banks consider CEO perquisites as a type of agency cost when they make lending decisions.

Original languageEnglish
Pages (from-to)1221–1258
Number of pages38
JournalReview of Quantitative Finance and Accounting
StatePublished - May 2021


  • Agency cost
  • CEO perquisites
  • Compensation schemes
  • Corporate governance
  • Loan spread


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