PhD Seminar with Marcus Hober

Title: ESG News and Relationship Lending

Abstract: This paper presents novel evidence on how environmental, social, and governance (ESG) incidents reshape lending relationships. Using granular ESG news data matched to syndicated loans, we show that adverse developments in borrowers' ESG news coverage prompt relationship lenders to relinquish the lead arranger role and become participants. Distant lenders step in as lead arrangers. Our results suggest these patterns are driven by reputational concerns rather than credit risk. While relationship lenders withdraw, syndicate adaptations preserve monitoring: syndicates expand and lead arrangers retain larger loan shares, consistent with enforcement of collective discipline and mitigation of moral hazard in monitoring. By contrast, positive ESG news coverage attracts ESG-committed lead arrangers, who certify borrowers and coordinate ESG-aligned capital.