Corporate Capital Structure and Firm Value: International Evidence on the Special Roles of Bank Debt

Allen N. Berger, Sadok El Ghoul, Omrane Guedhami and Jiarui Guo

Review of Corporate Finance, 2021, vol. 1, issue 1-2, 1-41

Abstract: We contribute to the corporate capital structure and bank specialness literatures by studying the effects of bank debt on corporate value. We apply novel methodology to almost 60,000 firms in 110 countries over 17 years – over 300,000 total observations. We find that bank term loans and credit lines are strongly positively associated with firm value, but only when employed very intensively – at 90% or more of total corporate debt. These effects are consistent with bank specialness at high-intensity levels. These findings support previously untested theoretical predictions that bank specialness would be stronger or exist only at high bank debt intensities. Our results hold broadly, but are stronger for credit-constrained firms – small firms and those in low-income countries. Channel analysis suggests that term loans boost short-term firm performance more, while credit lines better promote long-run growth. The findings suggest future research topics and have policy implications, particularly during the COVID-19 crisis.

Keywords: Capital structure; banks; bank specialness; debt finance; debt intensity (search for similar items in EconPapers)
JEL-codes: G21 G32 (search for similar items in EconPapers)
Date: 2021
References: Add references at CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://dx.doi.org/10.1561/114.00000001 (application/xml)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:now:jnlrcf:114.00000001

Access Statistics for this article

More articles in Review of Corporate Finance from now publishers
Bibliographic data for series maintained by Lucy Wiseman ().