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A Peer-reviewed scientific articles/A1 Journal article (refereed), original research
      
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Beauty is in the eye of the beholder: The effect of corporate tax avoidance on the cost of bank loans, Journal of Financial Economics 1 (2014). Hasan, Iftekhar; Hoi, Chun Keung (Stan); Wu, Qiang; Zhang, Hao


Category A Peer-reviewed scientific articles
Sub-category A1 Journal article (refereed), original research
auki Internal authors
All authors as text Hasan, Iftekhar; Hoi, Chun Keung (Stan); Wu, Qiang; Zhang, Hao 
Number of authors
Status Published
Year of publication 2014 
Date 15.07.2014 
Name of article Beauty is in the eye of the beholder: The effect of corporate tax avoidance on the cost of bank loans 
Name of journal Journal of Financial Economics
Volume of issue 113 
Number of issue
Pages 109–130 
Abstract We find that firms with greater tax avoidance incur higher spreads when obtaining bank loans. This finding is robust in a battery of sensitivity analyses and in two quasi-experimental settings including the implementation of Financial Accounting Standards Board Interpretation No. 48 and the revelation of past tax sheltering activity. Firms with greater tax avoidance also incur more stringent nonprice loan terms, incur higher at-issue bond spreads, and prefer bank loans over public bonds when obtaining debt financing. Overall, these findings indicate that banks perceive tax avoidance as engendering significant risks.
Free text descriptor in English Tax avoidance; Cost of bank loans; Information risk; Agency risk; FIN 48 
JEL-codes G21; G32; H26 
ISSN / e-ISSN 0304-405X 
auki Internet addresses
Additional information Available online 19 March 2014
Notes BoF DP 3/2014 


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