The effects of reporting standards and information sharing on loan contracting: Cross-country evidence
Institutional factors that enhance the quality of financial reporting and sharing of credit information can alleviate informational gaps between contracting parties and improve loan contract terms. Using cross-country data on syndicated loans, we find that the cost of debt financing is lower for ris...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
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Taylor & Francis Group
2020-01-01
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| Series: | Cogent Economics & Finance |
| Subjects: | |
| Online Access: | http://dx.doi.org/10.1080/23322039.2020.1716920 |
| _version_ | 1819138942041063424 |
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| author | Balagopal Gopalakrishnan Sanket Mohapatra |
| author_facet | Balagopal Gopalakrishnan Sanket Mohapatra |
| author_sort | Balagopal Gopalakrishnan |
| collection | DOAJ |
| description | Institutional factors that enhance the quality of financial reporting and sharing of credit information can alleviate informational gaps between contracting parties and improve loan contract terms. Using cross-country data on syndicated loans, we find that the cost of debt financing is lower for riskier borrowers in countries with stronger reporting standards and improved credit information sharing. We also find that information quality is more important as compared to information sharing for loan pricing. Both of these effects are larger during periods of higher economic policy uncertainty when information asymmetry is likely to be higher. Our findings suggest that better availability of hard information plays a positive role in reducing borrowing costs of riskier firms. |
| first_indexed | 2024-12-22T11:14:46Z |
| format | Article |
| id | doaj.art-f2c1b8b818ef44e082d73e0ad25e4b18 |
| institution | Directory Open Access Journal |
| issn | 2332-2039 |
| language | English |
| last_indexed | 2024-12-22T11:14:46Z |
| publishDate | 2020-01-01 |
| publisher | Taylor & Francis Group |
| record_format | Article |
| series | Cogent Economics & Finance |
| spelling | doaj.art-f2c1b8b818ef44e082d73e0ad25e4b182022-12-21T18:28:04ZengTaylor & Francis GroupCogent Economics & Finance2332-20392020-01-018110.1080/23322039.2020.17169201716920The effects of reporting standards and information sharing on loan contracting: Cross-country evidenceBalagopal Gopalakrishnan0Sanket Mohapatra1Indian Institute of Management KozhikodeIndian Institute of Management AhmedabadInstitutional factors that enhance the quality of financial reporting and sharing of credit information can alleviate informational gaps between contracting parties and improve loan contract terms. Using cross-country data on syndicated loans, we find that the cost of debt financing is lower for riskier borrowers in countries with stronger reporting standards and improved credit information sharing. We also find that information quality is more important as compared to information sharing for loan pricing. Both of these effects are larger during periods of higher economic policy uncertainty when information asymmetry is likely to be higher. Our findings suggest that better availability of hard information plays a positive role in reducing borrowing costs of riskier firms.http://dx.doi.org/10.1080/23322039.2020.1716920syndicated loansreporting standardsinformation sharingeconomic policy uncertainty |
| spellingShingle | Balagopal Gopalakrishnan Sanket Mohapatra The effects of reporting standards and information sharing on loan contracting: Cross-country evidence Cogent Economics & Finance syndicated loans reporting standards information sharing economic policy uncertainty |
| title | The effects of reporting standards and information sharing on loan contracting: Cross-country evidence |
| title_full | The effects of reporting standards and information sharing on loan contracting: Cross-country evidence |
| title_fullStr | The effects of reporting standards and information sharing on loan contracting: Cross-country evidence |
| title_full_unstemmed | The effects of reporting standards and information sharing on loan contracting: Cross-country evidence |
| title_short | The effects of reporting standards and information sharing on loan contracting: Cross-country evidence |
| title_sort | effects of reporting standards and information sharing on loan contracting cross country evidence |
| topic | syndicated loans reporting standards information sharing economic policy uncertainty |
| url | http://dx.doi.org/10.1080/23322039.2020.1716920 |
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