The Costs of Being Private: Evidence from the Loan Market

@article{Saunders2011TheCO,
  title={The Costs of Being Private: Evidence from the Loan Market},
  author={A. Saunders and S. Steffen},
  journal={Review of Financial Studies},
  year={2011},
  volume={24},
  pages={4091-4122}
}
Using a new dataset of UK-syndicated loans, we document a significant loan cost disadvantage incurred by privately held firms. For identification, we use the distance of a firm's headquarters to London's capital markets as a plausibly exogenous variation in corporate structure (i.e., public/private) choice. We analyze the channels of the loan cost disadvantage of being private by documenting the importance of: the higher costs of information production, the lower bargaining power, the… Expand
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