Social Capital and Debt Contracting: Evidence from Bank Loans and Public Bonds (Sosiaalinen PPPoma Kurinalaistaa Yritysten KKytttytymistt Velkasopimuksissa)

2015 ◽  
Author(s):  
Iftekhar Hasan ◽  
Chun Keung (Stan) Hoi ◽  
Qiang Wu ◽  
Hao Zhang
Keyword(s):  
Social Capital ◽  
Bank Loans ◽  
Debt Contracting ◽  
Public Bonds

scholarly journals Social Capital and Debt Contracting: Evidence from Bank Loans and Public Bonds

2017 ◽  
Vol 52 (3) ◽  
pp. 1017-1047 ◽  
Author(s):  
Iftekhar Hasan ◽  
Chun Keung Hoi ◽  
Qiang Wu ◽  
Hao Zhang
Keyword(s):  
Social Capital ◽  
Causal Relation ◽  
Tax Avoidance ◽  
Bank Loans ◽  
Bank Loan ◽  
Debt Contracting ◽  
Loan Terms ◽  
Loan Spreads ◽  
Bond Spreads ◽  
Public Bonds

We find that firms headquartered in U.S. counties with higher levels of social capital incur lower bank loan spreads. This finding is robust to using organ donation as an alternative social capital measure and incremental to the effects of religiosity, corporate social responsibility, and tax avoidance. We identify the causal relation using companies with a social-capital-changing headquarters relocation. We also find that high-social-capital firms face loosened nonprice loan terms, incur lower at-issue bond spreads, and prefer public bonds over bank loans. We conclude that debt holders perceive social capital as providing environmental pressure that constrains opportunistic firm behaviors in debt contracting.

scholarly journals Social Capital and Debt Contracting: Evidence from Bank Loans and Public Bonds

2015 ◽  
Author(s):  
Iftekhar Hasan ◽  
Chun Keung (Stan) Hoi ◽  
Qiang Wu ◽  
Hao Zhang
Keyword(s):  
Social Capital ◽  
Bank Loans ◽  
Debt Contracting ◽  
Public Bonds

Is Social Capital Priced in Bank Loans?

2015 ◽  
Author(s):  
C.S. Agnes Cheng ◽  
Jing Wang ◽  
Ning Zhang ◽  
Sha Zhao
Keyword(s):  
Social Capital ◽  
Bank Loans

Bowling Alone, Bowling Together: Is Social Capital Priced in Bank Loans?

2017 ◽  
Vol 32 (4) ◽  
pp. 449-479 ◽  
Author(s):  
C. S. Agnes Cheng ◽  
Jing Wang ◽  
Ning Zhang ◽  
Sha Zhao
Keyword(s):  
Social Capital ◽  
New York ◽  
Terrorist Attack ◽  
The State ◽  
Bank Loans ◽  
Financing Costs ◽  
Societal Level ◽  
Capital Building ◽  
Loan Spreads ◽  
The Cost

We investigate whether the societal-level social capital enjoyed by firms affects the cost of their bank loans. Employing a measure of societal-level social capital for U.S. counties, we find that firms with higher societal-level social capital are associated with lower loan spreads. To further identify causality, we explore two events: Using a sample of firms that relocate their headquarters for tax reasons, we find that firms that move to lower (higher) social capital counties experience a higher (lower) cost of bank loans following relocations. The second event was the terrorist attack on September 11, 2001. After the disaster, social capital in affected counties—mainly in the State of New York, the State of Virginia, and adjacent counties—increased through social capital building efforts. We show that firms headquartered in the affected counties experience significantly lower loan spreads than other firms after the attack. Our findings contribute to the understanding of how societal-level social capital promotes economic development through its impact on financing costs.

scholarly journals Social Capital and Cost of Bank Loans During the Financial Crisis

2021 ◽  
Vol 25 (2) ◽  
pp. 107
Author(s):  
Abdelmajid Hmaittane ◽  
Mohamed Mnasri ◽  
Kais Bouslah ◽  
Bouchra M’Zali
Keyword(s):  
Social Capital ◽  
Financial Crisis ◽  
Bank Loans

Accounting Quality and Debt Contracting

2008 ◽  
Vol 83 (1) ◽  
pp. 1-28 ◽  
Author(s):  
Sreedhar T. Bharath ◽  
Jayanthi Sunder ◽  
Shyam V. Sunder
Keyword(s):  
Public Debt ◽  
Information Access ◽  
Bank Loans ◽  
Accounting Quality ◽  
Debt Contracts ◽  
Private Debt ◽  
Debt Contracting ◽  
Interest Spreads ◽  
Processing Abilities ◽  
The Impact

We study the role of borrower accounting quality in debt contracting. Specifically, we examine how accounting quality affects the borrower's choice of private versus public debt market and how the design of debt contracts vary with accounting quality in the two markets. We find that accounting quality affects the choice of the market, with poorer accounting quality borrowers preferring private debt, i.e., bank loans. This is consistent with banks possessing superior information access and processing abilities that reduce adverse selection costs for borrowers. We also find that accounting quality has an economically significant but differential impact on contract design in the two markets consistent with differences in recontracting flexibility across the two markets. In the case of private debt, since there is greater recontracting flexibility, both the price (i.e., interest) and non-price (i.e., maturity and collateral) terms are significantly more stringent for poorer accounting quality borrowers, unlike public debt where only the price terms are more stringent. The impact of accounting quality on interest spreads of public debt is 2.5 times that of the private debt, since the price terms alone reflect the variation in accounting quality.

Organized Labor and Debt Contracting: Firm-Level Evidence from Collective Bargaining

2016 ◽  
Vol 92 (3) ◽  
pp. 57-85 ◽  
Author(s):  
Lin Cheng
Keyword(s):  
Collective Bargaining ◽  
Information Asymmetry ◽  
Bank Loans ◽  
Data Availability ◽  
Organized Labor ◽  
Firm Level ◽  
Debt Contracting ◽  
Proprietary Costs ◽  
Adverse Selection Costs ◽  
Public Disclosures

ABSTRACT This paper employs a firm-level collective bargaining dataset to investigate the effect of labor, as an important stakeholder of a firm, on debt contracting. I conjecture and provide evidence that firms with strong organized labor prefer bank loans to public bonds because, by communicating with banks privately, unionized firms can reduce the adverse selection costs while preserving the information asymmetry with organized labor. Furthermore, I show that organized labor influences the structure of syndicated loans. When firms with strong unions withhold public disclosures, but communicate privately with lead lenders, heightened information asymmetry between the lead lenders and the participant lenders induces the lead lenders to retain larger shares of the loans and form more concentrated syndicates. Overall, this study demonstrates that the proprietary costs of disclosure related to organized labor significantly influence firms' debt contracting decisions and outcomes. Data Availability: Data are available from sources identified in the text.

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