We examine changes in bank loan contracts after borrowers experience a nearby local newspaper closure. Compared to a sample of control firms, we find that the closure of a local newspaper leads to higher interest spreads for borrowers. This effect is more pronounced when there are fewer related lenders in the syndicate, when lenders have less prior lending experience in the local area, when the closed local newspapers are associated with increases in misconduct cases, and for institutional lenders who rely more heavily on others for monitoring. In addition, we observe that loan contract amendments become less frequent, while covenant strictness increases following newspaper closures. Our main findings are robust to various research design specifications and are not driven by deteriorating local economic conditions. Our findings suggest that local media still plays a significant role in the debt markets, even as society moves deeper into the internet era.
We study how proprietary information flows in strategic alliances facilitate banks’ information collection in private debt markets. We argue that lenders that have previously worked with a borrower’s alliance partners have an information advantage and show that firms entering a strategic alliance receive a lower interest spread on loans from banks that have previously lent to their strategic partners than loans from other banks. Cross-sectional tests on alliances’ economic importance and participants’ information environment support our hypothesis that the loan price effect is driven by reduced information asymmetry between borrowers and their partners’ relationship banks. Last, we find borrowers are more likely to obtain debt financing from alliance-related banks than from other banks. Overall, our findings are consistent with lenders that have previously worked with an alliance counterparty possessing debt contracting-relevant information about the soft nature of alliance value and the partners’ commitment to alliances.
This study explores the association between firm innovation and loan covenant strictness. We find that lenders construct stricter contracts for firms filing more patents, consistent with lenders imposing more oversight on firms when they enter the commercialization stage after having demonstrated their inventiveness. Our results hold under propensity score matching and entropy balancing, and when exploiting the American Inventors Protection Act as a shock affecting unrelated banks’ access to patent filing information. The relationship we document is stronger when the lender has more expertise and for firms with higher default risk. We demonstrate that borrowers’ patent filings are associated with more future R&D and capital investment and with a higher likelihood of their acquiring firms in the industry of their patent filings. Our results are consistent with the theoretical prediction that lenders interpret patent filings as indicative of high inventive potential that requires stricter discipline and oversight by lenders in order to be converted into actual business success, and with them designing debt contract terms accordingly.
我們的研究顯示，企業管理層傾向以不按比例的方式，匯報略高於以十進制作為單位的總收入（例如 1,000 萬、3,000 萬、10 億），並審視這種行為的動機和後果。聚焦研究以十進制表述收入有其重要之處，原因是儘管這種做法在高管薪酬合同、分析師預測和管理預測的目標收入設定中十分普遍，但過去從未有這方面的研究。我們的研究亦指出，實現這些目標的壓力為以十進制單位來匯報收入的做法提供了一種解釋。然而，這些激勵效應並不能提供完整的解釋，因為即使沒有這些明確的目標，仍會以十進制單位作為達標門檻。我們進一步發現，當公司首次達到以十進制單位的門檻時，不論有否達到其他目標，其新聞報導篇幅、機構持份、流動性和分析師關注度都會有所增加。這些結果表明，管理層會為了提高公司的整體知名度來達成以十進制作為單位的目標。總體而言，研究顯示了對本質上沒有經濟意義的十進制數字的偏好，並對市場參與者的行為具有可衡量的影響。這些研究結果為以往尚未探索過的一系列管理目標敞開了大門。