THE IMPACT OF HOW THE COVID-19 PANDEMIC CHANGED THE CHARACTERISTICS OF LOANS IN THE UNITED STATES BETWEEN BORROWER INDUSTRIES THAT ARE HEAVILY SUPPORTED BY GOVERNMENT STIMULUS, COMPARED TO THOSE NOT SUPPORTED TO THE SAME EXTENT

In this paper, I am looking to measure the difference between characteristics in loan spreads before and after COVID depending if the industry of the borrower is highly supported or not supported by governmental stimulus. This paper reveals that due to COVID-19 stimulus of supported industries, there is a meaningful difference between loan characteristics (margin, number of arrangers, and tenor) between borrowers supported versus not supported by stimulus. These findings can help financial managers at corporations have additional information on the impact on government policy on loan spreads that can be factored into structuring a firm\u27s capital structure

The Impact of a Strong Bank-Firm Relationship on the Borrowing Firm

Commercial banks acquire inside information about the firms they lend to. We study the impact of this informationally privileged position on the borrowing firm using a broad panel of U.S. firms over the 1993--2004 period. We measure the strength of the bank-firm relationship by bank-firm proximity, size of the loan, and the lender's insider potential. We show that a stronger relationship, by inducing better monitoring, improves the borrower's corporate governance. Simultaneously, it makes the bank a potentially more informed agent in the equity market. This information asymmetry increases adverse selection for the other market participants and lowers the firm's stock liquidity. This trade-off between improved corporate governance and greater information asymmetry affects the firm's value. Our results have normative implications for the role of banks in the development of financial markets. The Author 2009. Published by Oxford University Press on behalf of The Society for Financial Studies. All rights reserved. For Permissions, please e-mail: [email protected]., Oxford University Press.

Mutual Funds and Bubbles: The Surprising Role of Contractual Incentives

This article studies one of the potential causes of the financial market bubble of the late 1990s: the herding behavior of mutual funds. We show that the incentives contained in the mutual funds' advisory contracts induce managers to overcome their tendency to herd. We argue that investing in bubble stocks amounts to herding and contracts with high incentives induce managers to diverge from the herd, thus reducing their holding of bubble stocks. The differential exposure to bubble stocks significantly impacted the funds' performance both in the period prior to March 2000, as well as afterwards. The Author 2007. Published by Oxford University Press on behalf of The Society for Financial Studies., Oxford University Press.

Liquid Stock as an Acquisition Currency (CEIBS Working Paper, No. 018/2020/FIN, 2020)

We examine how stock liquidity affects acquisitions. We hypothesize that liquidity enhances acquirer stock as an acquisition currency, especially when the target is relatively less liquid. As hypothesized, more liquid firms are more likely to make acquisitions and the difference in stock liquidity between acquirer and target firms increases payment with stock, reduces acquisition premiums, and improves acquirer announcement returns in equity deals. To exploit benefits of liquidity, firms take steps to improve stock liquidity prior to stock acquisitions. Our empirical identification relies on policy initiatives that exogenously increase stock liquidity