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http://hdl.handle.net/10397/115241
| Title: | Firm-level political risk and bank loan contracting | Authors: | Saffar, W Wang, Y Wei, KCJ |
Issue Date: | 2024 | Source: | Contemporary accounting research, Fall 2024, 41, no. 3, p. 1577-1607 | Abstract: | We investigate the impact of firm-level political risk on loan contracting. We find that firm-level political risk is positively associated with bank loan cost and that this effect is stronger for firms experiencing increased operational uncertainty and higher default risks. Firm-level political risk also leads to more unfavorable non-pricing loan terms. To alleviate endogeneity concerns, we use an instrumental variable approach and placebo tests. We further find that political connections and relationship-based borrowing can attenuate the adverse effect of firm-level political risk on loan contracting. | Keywords: | Bank loan cost Default risk Firm-level political risk Loan covenants Operational uncertainty |
Publisher: | Canadian Academic Accounting Association | Journal: | Contemporary accounting research | ISSN: | 0823-9150 | EISSN: | 1911-3846 | DOI: | 10.1111/1911-3846.12951 | Rights: | © 2024 Canadian Academic Accounting Association. This is the peer reviewed version of the following article: Saffar, W., Wang, Y., & Wei, K. C. J. (2024). Firm-level political risk and bank loan contracting. Contemporary Accounting Research, 41(3), 1577–1607, which has been published in final form at https://doi.org/10.1111/1911-3846.12951. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions. This article may not be enhanced, enriched or otherwise transformed into a derivative work, without express permission from Wiley or by statutory rights under applicable legislation. Copyright notices must not be removed, obscured or modified. The article must be linked to Wiley’s version of record on Wiley Online Library and any embedding, framing or otherwise making available the article or pages thereof by third parties from platforms, services and websites other than Wiley Online Library must be prohibited. |
| Appears in Collections: | Journal/Magazine Article |
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