Shared leadership and information production: how co-lead arrangements reshape syndicated loan governance

Using syndicated loan data, we examine how co-lead arrangements are associated with information production and monitoring. Co-lead loans exhibit greater sensitivity of loan spreads to hard-to-observe future borrower risk, consistent with more informative ex ante pricing. Co-lead loans are also associated with fewer covenant violations when lead arrangers are highly reputable. These associations are generally stronger for informationally opaque borrowers. Overall, the evidence is consistent with shared leadership facilitating the incorporation of borrower risk into loan pricing and strengthening monitoring when arrangers have strong reputational incentives.