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Corporate Misreporting and Bank Loan Contracting / John R. Graham, Si Li, Jiaping Qiu.
- Format:
- Book
- Author/Creator:
- Graham, John R.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w13708.
- NBER working paper series no. w13708
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2007.
- Summary:
- This paper is the first to study the effect of financial restatement on bank loan contracting. Compared with loans initiated before restatement, loans initiated after restatement have significantly higher spreads, shorter maturities, higher likelihood of being secured, and more covenant restrictions. The increase in loan spread is significantly larger for fraudulent restating firms than other restating firms. We also find that after restatement, the number of lenders per loan declines and firms pay higher upfront and annual fees. These results are consistent with the view that banks use tighter loan contract terms to overcome risk and information problems arising from financial restatements.
- Notes:
- Print version record
- December 2007.
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