Please use this identifier to cite or link to this item: http://scholarbank.nus.edu.sg/handle/10635/118530
Title: BANK FINANCING AND FIRM VALUATION
Authors: JIN YINGSHI
Keywords: Bank Financing, Firm Valuation, Information Friction, Opaque firms, Hold-up Costs, Bank Loan Availability vs. Bank Loan Usage.
Issue Date: 15-Aug-2014
Source: JIN YINGSHI (2014-08-15). BANK FINANCING AND FIRM VALUATION. ScholarBank@NUS Repository.
Abstract: THE CENTRAL QUESTION THIS PAPER INVESTIGATES IS WHETHER BANK LOAN IS A SPECIAL FORM OF DEBT. BANK FINANCING REDUCES INFORMATION FRICTION AND HAS SEVERAL OTHER CONTRACTUAL BENEFITS FOR THE BORROWING FIRMS. THERE IS ALSO A COST TO THIS RELATIONSHIP, WHICH IS THE HOLD-UP PROBLEM. WITH HOLD-UP, BANKS CAN CHARGE A NON-COMPETITIVE RATE TO A BORROWER. WITH A LARGE AND COMPREHENSIVE BANK LOAN SAMPLE, I INVESTIGATE THE EFFECTS OF BANK FINANCING ON FIRM VALUATION REPRESENTED BY TOBIN?S Q, WITH THESE BENEFITS AND COSTS IN MIND. I FIND THAT, IN AGGREGATE, BANK FINANCING HAS A POSITIVE EFFECT ON FIRM VALUATION, EVEN AFTER CONTROLLING FOR DEBTS IN THE CAPITAL STRUCTURE, AND THE ENDOGENEITY OF BANK FINANCING. CROSS-SECTIONALLY, OPAQUE FIRMS AND FIRMS WITH FINANCING CONSTRAINTS HAVE LOWER VALUATION WHEN THEY HAVE OUTSTANDING BANK LOANS, PROVIDING SUPPORT FOR THE HOLD-UP STORY. I ALSO TEST THE CHANNEL OF THE EFFECT OF BANK LOAN BY INVESTIGATING BANK LOAN AVAILABILITY VS. BANK LOAN USAGE.
URI: http://scholarbank.nus.edu.sg/handle/10635/118530
Appears in Collections:Ph.D Theses (Open)

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