Essays on corporate borrowing
Item
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Title
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Essays on corporate borrowing
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Identifier
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d_2009_2013:ed61b750d8c4:11803
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identifier
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12386
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Creator
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Lian, Yili,
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Contributor
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Armen Hovakimian
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Date
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2013
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Language
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English
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Publisher
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City University of New York.
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Subject
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Finance | Bank Influence | Bond Performance | Covenant Violation | Loan Covenants | Loan Spread | Local Bank Competition
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Abstract
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This dissertation comprises two essays on corporate borrowing. In the first essay, I study the relation between local bank competition and the cost of corporate borrowing. Using LPC DealScan data from 1995 to 2010, I find that loan spread, number of covenants and covenant strictness are negatively related to local bank competition. Firms with non-investment grade benefit more from bank competition than firms with investment grade. The results suggest that lenders from a competitive loan market give more favorable loans to borrowers.;In the second essay, I study creditor's control right and its impact on bond performance. By examining bond performance of nonfinancial firms with both bank loan and public bonds from 1996 through 2008, I find that bondholders react positively to loan covenant violation from long-term and short-term bond abnormal returns. I show that cross-section abnormal bond returns are positively related to bank's incentive to influence. I provide evidence of bank's influence over corporate governance, such as forced CEO turnover and bank directors on board. Finally, I find that cross-section abnormal stock return is positively related to bank's incentive to influence and conclude that bank influence creates value for both public bondholders and stockholders.
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Type
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dissertation
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Source
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2009_2013.csv
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degree
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Ph.D.
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Program
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Business
