Faculty of Business Administration

Do Banks Price Director Reputation? Evidence from Corporate Financial Frauds

Prof. In-Mu Haw

Professor of Accounting

Texas Christian University

Abstract

Using corporate financial fraud as a shock to the reputation of directors with multiple directorships, we find that bank lenders charge significantly higher loan spreads to interlocked borrowers in response to damage to their director’s reputation by other firms’ financial frauds. The increase in loan spreads is more pronounced if the tainted director holds important fraud-related board positions in either interlocked borrowers or fraud firms. The spread increase is exacerbated by the severity of the damage to the shared director’s reputation. Our findings highlight novel insights into the pricing of reputational damage of a shared director in private debt markets.

Date: 6 June 2019 (Thursday)

Time: 15:00~16:30

Venue: E22-1015

Biography

Prof. In-Mu Haw is the Chair Professor of accounting in the Neeley School of Business, Texas Christian University and the co-editor of The International Journal of Accounting. He has publications in top accounting and finance journals such as Journal of Accounting Research, Review of Accounting Studies, Contemporary Accounting Research, Auditing: A Journal of Practice and Theory, Journal of Corporate Finance, etc.