Abstract
We find that banks with CEOs who postpone exercising deep in-the-money options are more likely to lend to firms that are smaller, riskier, and more engaged in corporate innovation. These borrowers also spend more on R&D than a matched sample after getting the loans. Subsequently, these borrowers have higher innovation outputs and achieve greater market valuations. Overall, our findings suggest that the bank CEOs who reveal a high risk-taking attitude by their option exercising behavior help facilitate technological progress via the syndicate loans.
Original language | English |
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Article number | 102387 |
Journal | Journal of International Money and Finance |
Volume | 115 |
DOIs | |
State | Published - Jul 2021 |
Keywords
- Bank syndicate loan
- CEO risk-taking attitude
- Corporate innovation
- R&D
- Tobin's q