nep-cfn New Economics Papers
on Corporate Finance
Issue of 2015‒12‒12
two papers chosen by
Zelia Serrasqueiro
Universidade da Beira Interior
  1. Social Capital and Debt Contracting: Evidence from Bank Loans and Public Bonds By Hasan, Iftekhar; Hoi, Chun-Keung (Stan); Wu, Qiang; Zhang , Hao
  2. An Attempt to Disperse the Italian Interlocking Directorship Network: Analyzing the Effects of the 2011 Reform By Carlo Drago; Roberto Ricciuti; Paolo Santella
  1. By: Hasan, Iftekhar (Fordham University and Bank of Finland); Hoi, Chun-Keung (Stan) (Saunders College of Business, Rochester Institute of Technology); Wu, Qiang (Lally School of Management, Rensselaer Polytechnic Institute); Zhang , Hao (Saunders College of Business, Rochester Institute of Technology)
    Abstract: We find that firms headquartered in U.S. counties with higher levels of social capital incur lower bank loan spreads. This finding is robust to using organ donation as an alternative social-capital measure and incremental to the effects of religiosity, corporate social responsibility, and tax avoidance. We identify the causal relation using companies with a social-capital-changing headquarter relocation. We also find that high-social-capital firms face loosened nonprice loan terms, incur lower at-issue bond spreads, and prefer bonds over loans. We conclude that debt holders perceive social capital as providing environmental pressure constraining opportunistic firm behaviors in debt contracting.
    Keywords: social capital; cooperative norm; moral hazard; cost of bank loans; public bonds
    JEL: G21 G32 Z13
    Date: 2015–11–20
    URL: http://d.repec.org/n?u=RePEc:hhs:bofrdp:2015_021&r=cfn
  2. By: Carlo Drago (“Niccolò Cusano” University); Roberto Ricciuti (University of Verona and CESifo); Paolo Santella (ESMA)
    Abstract: The purpose of this paper is to analyze the effects on the Italian directorship network of the corporate governance reform that was introduced in Italy in 2011 to prevent interlocking directorships in the financial sector. Interlocking directorships are important communication channels among companies and may have anticompetitive effect. We apply community detection techniques to the analysis of the networks in 2009 and 2012 to ascertain the effect of the reform. We find that, although the number of interlocking directorships decreases in 2012, the reduction takes place mainly at the periphery of the network whereas the network core is stable, allowing the most connected companies to keep their strategic position.
    Keywords: Interlocking Directorships, Corporate Governance, Community Detection, Social Networks
    JEL: C33 G34 G38 L14
    Date: 2015–10
    URL: http://d.repec.org/n?u=RePEc:fem:femwpa:2015.82&r=cfn
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