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We examine the relation between firm reputation and the cost of debt financing. We posit that corporate reputation … magazine's survey of company reputation, we find an inverse relation between a company's reputation and its bond credit spreads …. We also find that firms with high reputation face less stringent covenants. Further testing shows that bad reputation is …
Persistent link: https://www.econbiz.de/10012975361
This paper explores the effects of online customer ratings on debt capacity. Using a large sample of Parisian restaurants, we find a positive and economically significant relation between customer ratings and bank debt. We use the locally exogenous variation in customer ratings resulting from...
Persistent link: https://www.econbiz.de/10012295382
This paper examines whether firm reputation impacts borrowing costs and thus investment. Using unique data from Fortune … reputation measures removing the impact of prior financial performance. Further evidence suggests that banks reward reputable … firms with better contract terms because this reputation proxy contains incremental information on borrower future …
Persistent link: https://www.econbiz.de/10012848288
This paper investigates the effect of investment opportunities, audit quality and debt maturity on the interest paid by all-equity firms. Debt holders are likely to charge higher interest to price-protect themselves because of the under-investment and asset substitution problems. All-equity...
Persistent link: https://www.econbiz.de/10013126039
We expect that private firms choose a close relationship with a bank – often based on private information – in order to save on direct or proprietary costs of disclosure. For a large sample of bank relationships in 12 European countries, we find evidence that close bank relationships are...
Persistent link: https://www.econbiz.de/10012858240
Private firm financing, given the far-reaching importance of non-publicly traded companies for global output and employment, is still a relatively underexplored area. Since the seminal work of Petersen and Rajan (1994), only a small branch of research into private firms' cost of debt has been...
Persistent link: https://www.econbiz.de/10012990197
This paper investigates the cost of debt of parent and subsidiary firms on the US corporate bond market. Debt issued by subsidiary firms is economically relevant, as it represents 13% of the total US bond debt. I find that the bonds issued by non-financial subsidiary firms are related, both...
Persistent link: https://www.econbiz.de/10013295634
We show that the post earnings announcement drift (PEAD) is stronger for conglomerates thansingle-segment firms. Conglomerates, on average, are larger than single segment firms, so it isunlikely that limits-to-arbitrage drive the difference in PEAD. Rather, we hypothesize that marketparticipants...
Persistent link: https://www.econbiz.de/10012856855
Assuming benevolent managers, the debt-overhang problem suggests that distressed firms generally refrain from issuing equity. In contrast, agency theory predicts that distressed firm managers have strong self-interests to finance even deteriorating projects through equity issuance. This paper...
Persistent link: https://www.econbiz.de/10013038070
Corporate reputation is an important management objective, bearing the potential to create sustainable competitive …. Applying a validated measure of reputation, we scrutinize its impact for a set of German blue-chip companies between 2005 and … 2011. We show that higher levels of reputation are associated with a lower future cost of equity. While reputation …
Persistent link: https://www.econbiz.de/10012257467