Based on a dataset including 11,636 private debt placements issued globally between 1999 and 2016, we investigate the association between borrower-lender information asymmetry and the cost of debt for issuers. We observe that information asymmetry due to being a private or unrated firm is...

The term "information risk" or "information uncertainty" is defined as the risk of a misleading signal. This risk is understood Bayesianly in terms of the likelihood function f(S|φ). In Bayesian method, f(S|φ) captures the quality of signal S with respect to parameter φ. The Bayesian position...

The expected cost of capital is a crucial component for most of the topics in corporate finance. Unfortunately in the presence of risky debt, it is systematically overestimated. This bias is increasing in leverage and the volatility of cash flows. We show the existence of the bias and assess its...

Bowen, Chen and Cheng (2008) document a negative association between analyst following and the discount at issuance of seasoned equity offerings which, they argue, provides evidence of a direct link between analyst following, information asymmetry and cost of capital. While the empirical setting...

We study the relation between institutional shareholdings, private information in stock prices and the cost of capital. Using the probability of informed trading as a proxy for private information, we find that institutional ownership reduces private information in stock prices, and firms with...

This paper uses a sample of Chinese firms to examine the impact of corporate opacity on the relationship between family control and firms' cost of debt. We find that family control is associated with a lower cost of debt on average, and a negative impact exists mainly in firms with relatively...

We focus on the determinants and potentially associated benefits of relationship banking. Based on existing literature and the unique role intangible assets might play regarding asymmetric information, we derive three testable predictions. Using rich data on firm-bank relationships in Germany,...