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Title: Financial analysts' career concerns and the cost of private debt
Authors: Francis, B
Hasan, I
Liu, L
Wu, Q 
Zhao, Y
Issue Date: Apr-2021
Source: Journal of corporate finance, Apr. 2021, v. 67, 101868
Abstract: Career-concerned analysts are averse to firm risk. Not only does higher firm risk require more effort to analyze the firm, thus constraining analysts' ability to earn more remuneration through covering more firms, but it also jeopardizes their research quality and career advancement. As such, career concerns incentivize analysts to pressure firms to undertake risk-management activities, thus leading to a lower cost of debt. Consistent with our hypothesis, we find a negative association between analyst career concerns and bank loan spreads. In addition, our mediation analysis suggests that this association is achieved through the channel of reducing firm risk. Additional tests suggest that the effect of analyst career concerns on loan spreads is more pronounced for firms with higher analyst coverage. Our study is the first to identify the demand for risk management as a key channel through which analysts help reduce the cost of debt.
Keywords: Analysts’ career concerns
Cost of bank loans
Firm risk
Natural experiment
Publisher: Elsevier
Journal: Journal of corporate finance 
ISSN: 0929-1199
EISSN: 1872-6313
DOI: 10.1016/j.jcorpfin.2020.101868
Rights: © 2020 Elsevier B.V. All rights reserved.
© 2020. This manuscript version is made available under the CC-BY-NC-ND 4.0 license
The following publication Francis, B., Hasan, I., Liu, L., Wu, Q., & Zhao, Y. (2021). Financial analysts' career concerns and the cost of private debt. Journal of Corporate Finance, 67, 101868 is available at
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