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A Peer-reviewed scientific articles/A1 Journal article (refereed), original research

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Corporate Misconduct and the Cost of Private Debt : Evidence from China, Comparative Economic Studies 3 ; September (2019). Gu, Xian; Hasan, Iftekhar; Lu, Haitian


Category A Peer-reviewed scientific articles
Sub-category A1 Journal article (refereed), original research
auki Internal authors
All authors as text Gu, Xian; Hasan, Iftekhar; Lu, Haitian 
Number of authors 3 
Status Published
Year of publication 2019 
Date 15.09.2019 
Name of article Corporate Misconduct and the Cost of Private Debt : Evidence from China 
Name of journal Comparative Economic Studies
Volume of issue 61 
Number of issue 3 ; September 
Pages 443–463 
Abstract Using a comprehensive dataset of corporate lawsuits in China, we investigate the implications of corporate misconduct on the cost of private debt. Evidence reveals that firms involved in litigations obtain subsequent loans with stricter pricing terms, 15.1 percent higher loan spreads, than non-litigated borrowers. Strong political connection and repeated relationship help to flatten the sensitivity of loan pricing to litigation. Nonbank financial institutions react in stronger manner to corporate misconduct than traditional banks in pricing loans. Overall, we show that private debt holders care about borrowers’ wrongdoing in the past.
Free text descriptor in Finnish Kiina; yritykset; väärinkäytökset; luotot; korot; kustannukset; oikeustapaukset; politiikka; suhteet; 
Free text descriptor in English Litigation, Loan spreads, Political connection, Relationship 
JEL-codes G1, G14, L14 
ISSN / e-ISSN 0888-7233 
auki Internet addresses
Additional information First Online: 11 June 2019
Open Access Not known