We examine the hypothesis that firm size affects the sensitivity of bank term loan maturity to its underlying determinants. As borrower size increases, negotiating power with the lender and information transparency increase, while the lender is able to spread the fixed costs of loan production across a larger dollar value of the loan. We find strong evidence of firm size dependency in the determinants of bank term loan maturity and show that this is unrelated to syndication. Only "large" borrowers can manipulate bank loan contract terms so as to increase firm value.
Journal of Business Finance & Accounting
Dennis, Steven A; Sharpe, Ian G. (2005). Firm Size Dependence in the Determinants of Bank Term Loan Maturity. Journal of Business Finance & Accounting 32(1-2) 31-64. Retrieved from https://oaks.kent.edu/finpubs/5