Criminals, Bankruptcy, and Cost of Debt

Kasper Regenburg, Morten Nicklas Bigler Seitz*

*Corresponding author af dette arbejde

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We examine whether criminal records of CEOs and rank-and-file employees are associated with firms’ likelihood of bankruptcy, and whether lenders adjust their required cost of debt accordingly. We use a nationwide sample of private firms and criminal registers covering all firm employees. We find that the likelihood of bankruptcy is positively associated with the CEO’s criminal record and the proportion of employees with criminal records. We find some, though less robust, evidence that lenders price a firm’s loan higher when the firm’s CEO has a criminal record and when more of the employees have criminal records. The results suggest that the characteristics of firm employees represent a risk that, to some extent, is priced by lenders.
TidsskriftReview of Accounting Studies
Udgave nummer3
Sider (fra-til)1004-1045
Antal sider42
StatusUdgivet - sep. 2021


  • Bankruptcy predictions
  • Criminal records
  • Human capital
  • Cost of debt