Please use this identifier to cite or link to this item:
http://hdl.handle.net/10397/88879
| 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 http://creativecommons.org/licenses/by-nc-nd/4.0/. 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 https://dx.doi.org/10.1016/j.jcorpfin.2020.101868. |
| Appears in Collections: | Journal/Magazine Article |
Files in This Item:
| File | Description | Size | Format | |
|---|---|---|---|---|
| Francis_Financial_Analysts_Career.pdf | Pre-Published version | 1.45 MB | Adobe PDF | View/Open |
Access
View full-text via PolyU eLinks 
Page views
50
Last Week
1
1
Last month
Citations as of Jun 4, 2023
Downloads
4
Citations as of Jun 4, 2023
SCOPUSTM
Citations
6
Citations as of Jun 2, 2023
WEB OF SCIENCETM
Citations
5
Citations as of Jun 1, 2023
Google ScholarTM
Check
Altmetric
Items in DSpace are protected by copyright, with all rights reserved, unless otherwise indicated.