RT Article
T1 Employee Treatment and Contracting with Bank Lenders: An Instrumental Approach for Stakeholder Management
JF Journal of business ethics
VO 158
IS 4
SP 1029
OP 1046
A1 Francis, Bill
A1 Hasan, Iftekhar
A1 Liu, Liuling
A1 Wang, Haizhi
LA English
PB Springer Science + Business Media B. V
YR 2019
UL https://www.ixtheo.de/Record/178559995X
AB Adopting an instrumental approach for stakeholder management, we focus on two primary stakeholder groups (employees and creditors) to investigate the relationship between employee treatment and loan contracts with banks. We find strong evidence that fair employee treatment reduces loan price and limits the use of financial covenants. In addition, we document that relationship bank lenders price both the levels and changes in the quality of employee treatment, whereas first-time bank lenders only care about the levels of fair employee treatment. Taking a contingency perspective, we find that industry competition and firm asset intangibility moderate the relationship between good human resource management and bank loan costs. The cost reduction effect of fair employee treatment is stronger for firms operating in a more competitive industry and having higher levels of intangible assets.
K1 Loan covenants
K1 Cost of bank loans
K1 Instrumental approach
K1 Stakeholder Management
K1 Employee treatment
DO 10.1007/s10551-017-3722-0