Social Capital and Debt Contracting: Evidence from Bank Loans and Public BondsHasan, I., Hoi, C. K., Wu, Q. & Zhang, H., Jun-2017, In : Journal of Financial and Quantitative Analysis. 52, 3, p. 1017-1047 31 p.
Research output: Contribution to journal › Article › Academic › peer-review
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.
|Number of pages||31|
|Journal||Journal of Financial and Quantitative Analysis|
|Publication status||Published - Jun-2017|
- CORPORATE GOVERNANCE, EARNINGS MANAGEMENT, ORGANIZATIONS, MATTER, TRUST, STOCK, PARTICIPATION, TURNOUT, QUALITY, CHOICE