Yijun Meng
Trust and the Cost of Debt Financing
Meng, Yijun; Yin, Chao
Authors
Chao Yin
Abstract
This paper examines the relation between the level of trust in a country and the cost of debt. Using data on firms located in 22 countries over a 20-year period, we quantify the country trust level and find strong evidence that firms in countries with a higher level of societal trust have lower bond yield spreads. We also find that the impact of trust on the cost of debt is more pronounced in countries with a poor governance environment and during a time of financial crisis. Overall, our results highlight the role of social capital in shaping corporate financial behavior.
Citation
Meng, Y., & Yin, C. (2019). Trust and the Cost of Debt Financing. Journal of International Financial Markets, Institutions and Money, 59, 58-73. https://doi.org/10.1016/j.intfin.2018.11.009
Journal Article Type | Article |
---|---|
Acceptance Date | Nov 26, 2018 |
Online Publication Date | Nov 27, 2018 |
Publication Date | 2019-06 |
Deposit Date | Jul 27, 2020 |
Publicly Available Date | Jul 28, 2020 |
Journal | Journal of International Financial Markets, Institutions and Money |
Print ISSN | 1042-4431 |
Electronic ISSN | 1873-0612 |
Publisher | Elsevier |
Peer Reviewed | Peer Reviewed |
Volume | 59 |
Pages | 58-73 |
DOI | https://doi.org/10.1016/j.intfin.2018.11.009 |
Public URL | https://durham-repository.worktribe.com/output/1265472 |
Related Public URLs | http://centaur.reading.ac.uk/80885/ |
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Publisher Licence URL
http://creativecommons.org/licenses/by-nc-nd/4.0/
Copyright Statement
© 2018 This manuscript version is made available under the CC-BY-NC-ND 4.0 license http://creativecommons.org/licenses/by-nc-nd/4.0/
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