Online Reputation and Debt Capacity

Francois Derrien (), Alexandre Garel, Arthur Romec and Jean-Philippe Weisskopf
Additional contact information
Alexandre Garel: Audencia Business School
Arthur Romec: Toulouse Business School
Jean-Philippe Weisskopf: EHL Hospitality Business School

No 1367, HEC Research Papers Series from HEC Paris

Abstract: This paper explores the effects of online customer ratings on financial policy. Using a large sample of Parisian restaurants, we find a positive and economically significant relation between customer ratings and bank debt. We use the locally exogenous variations in customer ratings resulting from the rounding of scores in regression discontinuity tests to establish causality. Customer ratings have more impact on debt when information asymmetry is higher. They affect financial policy through a reduction in cash flow risk and greater resilience to demand shocks. Restaurants with good ratings use their extra debt to invest in tangible assets.

Keywords: online reputation; customer ratings; corporate debt; corporate investment (search for similar items in EconPapers)
JEL-codes: G14 G32 L15 L83 (search for similar items in EconPapers)
Pages: 69 pages
Date: 2020-03-09
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3538313 Full text (text/html)

Related works:
Journal Article: Online Reputation and Debt Capacity (2024)
Working Paper: Online Reputation and Debt Capacity (2024)
Working Paper: Online Reputation and Debt Capacity (2020)
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:ebg:heccah:1367

DOI: 10.2139/ssrn.3538313

Access Statistics for this paper

More papers in HEC Research Papers Series from HEC Paris HEC Paris, 78351 Jouy-en-Josas cedex, France. Contact information at EDIRC.
Bibliographic data for series maintained by Antoine Haldemann ().