Information Asymmetry and Borrower Behaviour in Loan Restructuring Negotiations: A Stakeholder Analysis in Emerging Market

Abstract Corporate loan restructurings in emerging markets persistently produce high default rates that quantitative models fail to explain, pointing to understudied relational dynamics in negotiation processes. This study investigates information asymmetry as a fundamental yet overlooked determinant of restructuring outcomes, asking how borrowers manage information and under what conditions they adopt cooperative rather than opportunistic behaviour. Drawing on Stakeholder Salience Theory and Agency Theory, the study employs a comparative case design examining 17 corporate loan restructurings across two commercial banks in Ghana. Data were collected through practitioner and borrower interviews and supplemented by analysis of restructuring documentation. The findings reveal that information asymmetry operates as a key power resource for borrowers during negotiations. However, comprehensive information rights incorporating open books provisions and independent verification mechanisms shift stakeholder salience in favour of banks and exert a strong deterrent effect on opportunistic behaviour. Three conditions emerge for borrower cooperation: the detectability of opportunistic behaviour through comprehensive information rights, the credibility of the verification procedure, and perceived recovery prospects contingent on bank support. The study advances the stakeholder theory of negotiations by demonstrating how information rights reconfigure power dynamics and stakeholder salience in loan restructuring, offering a novel theoretical account of borrower cooperation that extends beyond quantitatively based models and providing practical insights for banks seeking to mitigate default risk in emerging market contexts.