While theory predicts that bank loans provide valuable information to market participants, empirical results have been mixed. We propose and test the hypothesis that the benefits of bank loan announcements accrue differentially as a function of the borrowing firms’ financial or operating performance. Evidence from a sample of newly public firms supports this hypothesis. Keywords: bank lending, bank loan announcements, information asymmetry, newly public firms JEL Code: G14, G21.
International Research Journal of Applied Finance
Shaffer, Sherrill L. and Sokolyk, Tatyana (2012). "Bank Loans and Under-Performers." International Research Journal of Applied Finance 3.8, 1145-1150.