| Corporate Structure Complexity and Cost of Debt |
Tác giả hoặc Nhóm tác giả: Huỳnh Thị Hồng Hạnh, Phan Hoàng Long*
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| Nơi đăng: Finance a Uver - Czech Journal of Economics and Finance; Số: 73(4);Từ->đến trang: 375-391;Năm: 2023 |
| Lĩnh vực: Kinh tế; Loại: Bài báo khoa học; Thể loại: Quốc tế |
| TÓM TẮT |
| This paper investigates how a firm’s cost of debt is related to the
complexity of its corporate structure. Our hand-collected data sample
covers 3271 loan-year observations of 815 publicly listed US firms for
the period between 2012 and 2017. The results show a positive and
significant relationship between corporate structure complexity and cost
of debt. More complex firms are also found to have lower debt ratings
and more financial covenants enclosed in their loan contracts. These
findings suggest that greater corporate structure complexity is
associated with increased credit risk. Instrumental variable analysis
and a number of additional tests further confirm our results. Our
results also hold for corporate bonds. |
| ABSTRACT |
| This paper investigates how a firm’s cost of debt is related to the
complexity of its corporate structure. Our hand-collected data sample
covers 3271 loan-year observations of 815 publicly listed US firms for
the period between 2012 and 2017. The results show a positive and
significant relationship between corporate structure complexity and cost
of debt. More complex firms are also found to have lower debt ratings
and more financial covenants enclosed in their loan contracts. These
findings suggest that greater corporate structure complexity is
associated with increased credit risk. Instrumental variable analysis
and a number of additional tests further confirm our results. Our
results also hold for corporate bonds. |
