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http://hdl.handle.net/10397/93363
Title: | Corporate misconduct and the cost of private debt : evidence from China | Authors: | Gu, X Hasan, I Lu, H |
Issue Date: | Sep-2019 | Source: | Comparative economic studies, Sept. 2019, v. 61, no. 3, p. 443-463 | Abstract: | Using a comprehensive dataset of corporate lawsuits in China, we investigate the implications of corporate misconduct on the cost of private debt. Evidence reveals that firms involved in litigations obtain subsequent loans with stricter pricing terms, 15.1 percent higher loan spreads, than non-litigated borrowers. Strong political connection and repeated relationship help to flatten the sensitivity of loan pricing to litigation. Nonbank financial institutions react in stronger manner to corporate misconduct than traditional banks in pricing loans. Overall, we show that private debt holders care about borrowers’ wrongdoing in the past. | Keywords: | Litigation Loan spreads Political connection Relationship |
Publisher: | Palgrave Macmillan Ltd. | Journal: | Comparative economic studies | ISSN: | 0888-7233 | EISSN: | 1478-3320 | DOI: | 10.1057/s41294-019-00099-8 | Rights: | © Association for Comparative Economic Studies 2019 This version of the article has been accepted for publication, after peer review (when applicable) and is subject to Springer Nature’s AM terms of use (https://www.springernature.com/gp/open-research/policies/accepted-manuscript-terms), but is not the Version of Record and does not reflect post-acceptance improvements, or any corrections. The Version of Record is available online at: http://dx.doi.org/10.1057/s41294-019-00099-8 |
Appears in Collections: | Journal/Magazine Article |
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File | Description | Size | Format | |
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Lu_Corporate_Misconduct_Cost.pdf | Pre-Published version | 436.8 kB | Adobe PDF | View/Open |
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