Abstract
This study examines the impact of firms' environmental, social and governance (ESG) performance on borrower–lender relationships within syndicated loans. Analyzing a global panel of contracts, we examine the impact of ESG scores on the number of lenders and the ownership of lead arrangers. Utilizing theories of information asymmetry, agency, relational lending, and resource dependence, our findings indicate that high ESG performance decreases lead bank retention, thus broadening syndicates and distributing risk. However, prior borrower–led relationships can reverse this effect, emphasizing that ESG and relational trust act as complementary governance channels, shaping modern global credit markets and capital allocation across sectors.
| Original language | English |
|---|---|
| Journal | European Financial Management |
| Early online date | 12 Sept 2025 |
| DOIs | |
| Publication status | E-pub ahead of print - 12 Sept 2025 |
Bibliographical note
Copyright © 2025 John Wiley & Sons Ltd. This is the peer reviewed version of the following article: 'Saharti, M, Saeed , A, Chaudhry, SM & Ahmed, R 2025, 'ESG Performance of Firms and the Structure of Loan Syndicates: Moderating Role of Relationship', European Financial Management,' which has been published in final form at https://doi.org/10.1111/eufm.70019. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archived Versions.Keywords
- agency theory
- ESG disclosure
- information asymmetry
- loan structure
- relationship lending
- resource dependence theory
- sustainable finance
- syndicated loans