Analyst coverage and syndicated lending

Nicholas Hallman, John S. Howe () and Wei Wang
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Nicholas Hallman: University of Texas at Austin
John S. Howe: University of Missouri-Columbia
Wei Wang: Temple University

Review of Accounting Studies, 2023, vol. 28, issue 3, No 12, 1569 pages

Abstract: Abstract We study the effects of analyst coverage on syndicated lending. We hypothesize that analyst research alleviates information asymmetries between lead arrangers and participant lenders within a syndicate, increasing the participants’ credit supply and reducing the required loan interest spread. Using exogenous shocks to firms’ analyst coverage, we find that firms pay higher loan interest spreads and that participant lenders fund smaller fractions of the loans after firms experience a reduction in analyst coverage. Participants are more likely to be nonbank institutional investors and to transact with familiar lead arrangers after the coverage shocks.

Keywords: Sell-side analysts; Syndicated lending; Intra-syndicate information asymmetry; Exogenous shock; G21; G24; G3 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s11142-022-09670-8

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