Abstract
We examine whether coverage by analysts affiliated with lenders affects loan contracting. We find that loans to borrowers covered by affiliated analysts have lower spreads but more covenants based on financial information. Further analyses suggest the results are driven mostly by ex post monitoring, instead of ex ante screening. Exploiting plausibly exogenous variation in affiliated analysts generated by changes in brokerage house affiliation, we find that the result is likely to be causal. The results suggest that analysts could transfer private information about the borrowers to the lending arms of their affiliated financial conglomerates.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
