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Banks vs. markets: are banks more effective in facilitating sustainability?
Newton, David P.; Ongena, Steven; Xie, Ru; Zhao, Binru - 2022
Is bank- versus market-based financing different in its attitudes towards Environmental, Social, and Governance (ESG) risk? Using a novel sample covering 3,783 U.S. public firms from 2007 to 2020, we study how firm-level ESG risk affects its financing outcomes. We find that companies with higher...
Persistent link: https://www.econbiz.de/10013169151
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Dynamic leverage targets
Ippolito, Filippo; Sacchetto, Stefano; Steri, Roberto - 2017
We reconcile two seemingly contrasting empirical facts, active capital structure rebalancing and slow adjustments towards target leverage, through the lens of a standard dynamic capital structure model. In the model, firms adjust leverage towards a dynamic target, which is firm specific and...
Persistent link: https://www.econbiz.de/10011874865
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Leveraged loans: is high leverage risk priced in?
Newton, David P.; Ongena, Steven; Xie, Ru; Zhao, Binru - 2020
We investigate the impact of the 2014 Interagency Clarification on the leverage risk premium for bank- and nonbank-originated loans. Using a novel dataset from 2011 to 2019, we show that leveraged loan spreads have declined rapidly for nonbank facilities relative to bank facilities since the...
Persistent link: https://www.econbiz.de/10012420989
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Financing and takeovers
Morellec, Erwan (contributor); Zhdanov, Alexei (contributor) - 2006
This paper analyzes the interaction between financial leverage and takeover activity. We develop a dynamic model of …, and takeover terms, in which the bidder with the lowest leverage wins the takeover contest. Based on the resulting … bidder is below the industry average and that acquirers should lever up after the takeover consummation. The model also …
Persistent link: https://www.econbiz.de/10003394282
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Structured finance, acquisitions and debt agency
Neukomm, Gabriel H. - 2011 - Current version March 2011
Modern corporations use complex debt instruments and pursue acquisitions. In order to analyze the properties of some of these contracts in the event of an acquisition, this paper considers a company that has an incumbent capital structure, comprising one of five practically important structured...
Persistent link: https://www.econbiz.de/10009554552
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Financing investment: the choice between bonds and bank loans
Morellec, Erwan; Valta, Philip; Zhdanov, Alexei - 2014
We build a model of investment and financing decisions to study the choice between bonds and bank loans in a firm's marginal financing decision and its effects on corporate investment. We show that firms with more growth options, higher bargaining power in default, operating in more competitive...
Persistent link: https://www.econbiz.de/10010258730
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Relationship capital and financing decisions
Geelen, Thomas; Morellec, Erwan; Rostova, Natalia - 2021
Lending relationships matter for firm financing. In a model of debt dynamics, we study how lending relationships are formed and how they impact leverage and debt maturity choices. In the model, lending relationships evolve through repeated interactions between firms and debt investors. Stronger...
Persistent link: https://www.econbiz.de/10012612803
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News about zero-leverage firms
Geelen, Thomas A. - 2016
I develop a dynamic model of financing decisions and optimal debt maturity choice in which creditors face adverse selection and learn about the firm's quality from news. In equilibrium, shareholders may choose to postpone debt issuance to reduce adverse selection and improve the pricing of newly...
Persistent link: https://www.econbiz.de/10011626255
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Countercyclical foreign currency borrowing : Eurozone firms in 2007-2009
Bacchetta, Philippe; Merrouche, Ouarda - 2015
Despite international financial disintegration, we document a dramatic increase in dollar borrowing among leveraged Eurozone corporates during the Great Financial Crisis. Using loan-level data, we trace this increase to the twin crisis in the credit market and in funding markets. The reduction...
Persistent link: https://www.econbiz.de/10011507853
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Democratic development and credit : "Democracy doesn't come cheap" but at least credit to its corporations will be
Delēs, Manthos D.; Hasan, Iftekhar; Ongena, Steven - 2017
Does democratization reduce the cost of credit? Using global syndicated loan data from 1984 to 2014, we find that democratization has a sizeable negative effect on loan spreads: a one-point increase in the zero-to-ten Polity IV index of democracy shaves at least 19 basis points off spreads, but...
Persistent link: https://www.econbiz.de/10011761252