Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/212329 
Year of Publication: 
2015
Series/Report no.: 
Bank of Finland Research Discussion Papers No. 21/2015
Publisher: 
Bank of Finland, Helsinki
Abstract: 
We find that firms headquartered in U.S. counties with higher levels of social capital incur lower bank loan spreads. This finding is robust to using organ donation as an alternative social-capital measure and incremental to the effects of religiosity, corporate social responsibility, and tax avoidance. We identify the causal relation using companies with a social-capital-changing headquarter relocation. We also find that high-social-capital firms face loosened nonprice loan terms, incur lower at-issue bond spreads, and prefer bonds over loans. We conclude that debt holders perceive social capital as providing environmental pressure constraining opportunistic firm behaviors in debt contracting.
JEL: 
G21
G32
Z13
Persistent Identifier of the first edition: 
ISBN: 
978-952-323-073-6
Document Type: 
Working Paper

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