How Do Firms Choose Their Lenders? An Empirical InvestigationMiguel Cantillo and Julian Wright () Review of Financial Studies, 2000, vol. 13, issue 1, pages 155-89 Abstract: This article investigates which companies finance themselves through intermediaries and which borrow directly from arm's length investors. Our empirical results show that large companies with abundant cash and collateral tap credit markets directly; these markets cater to safe and profitable industries, and are most active when riskless rates or intermediary earnings are low. We show that determinants of lender selection sharpen during investment downturns and that there are substantial asymmetries in the way firms enter and exit capital markets. These results support a theoretical framework where intermediaries have better reorganizational skills but a higher opportunity cost of capital than bondholders. Article published by Oxford University Press on behalf of the Society for Financial Studies in its journal, The Review of Financial Studies. Date: 2000 There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: http://EconPapers.repec.org/RePEc:oup:rfinst:v:13:y:2000:i:1:p:155-89 Ordering information: This journal article can be ordered from Access Statistics for this article Review of Financial Studies is edited by Maureen O'Hara More articles in Review of Financial Studies from Oxford University Press for Society for Financial Studies |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
Swedish Business School at Örebro University.