Bank Loans and Under-Performers
journal contributionposted on 08.08.2012, 00:00 by Sherrill L. Shaffer, Tatyana Sokolyk
While theory predicts that bank loans provide valuable information to market participants, empirical results have been mixed. We propose and test the hypothesis that the benefits of bank loan announcements accrue differentially as a function of the borrowing firms' financial or operating performance. Evidence from a sample of newly public firms supports this hypothesis.