This paper studies whether banks charge higher or lower interest rates on loans to firms with overconfident CEOs. It establishes a theoretical model to show the relationship between the loan rate and overconfidence of the borrowing firm's CEO. It also conducts empirical analyses to test the...

This study investigates whether CEO perquisite of borrowing firms plays any significant role, both in terms of price and non-price settings, in financial contracts and reveals that lending banks demand significantly higher return (spread), more collateral, and stricter covenants from firms with...

Using a novel dataset of firm-level perceived trustworthiness from the news media and social media, we find that lending banks charge significantly higher loan spread on firms with lower trustworthiness. Loans to these firms also tend to have shorter loan maturities, more financial covenants,...

Using a difference-in-differences approach, we show that relaxation of short-sale constraints helps to filter out low-quality borrowers from the bank loan market. Treated firms that can still borrow from banks enjoy a lower loan spread, compared with control firms without this sorting mechanism....

We analyze whether the disaggregation quality (DQ) of a borrower's financial statement is associated with its bank loan pricing. We find that firms with low DQ have high bank loan spreads and total cost of borrowing. These results are more pronounced for risky and poorly governed firms....

We examine the effect of quantitative easing on the supply of bank loans and the issuance of corporate debts. During quantitative easing, lending banks demand significantly lower loan spreads, offer longer loan maturities, provide larger loans, and loosen covenants on firms whose long-term bond...

This paper investigates the impacts of board's corruption culture on the financing costs of firms. Evidence shows that lending banks attach higher loan spreads, higher total costs of borrowing, and stricter covenants to firms with a strong corruption culture in their boards. The results are...