Private or Public Debt? The Drivers of Debt Priority Structure for UK Firms

Barnes, Edel; Cahill, Brian

doi:10.2139/ssrn.493383

Cited by 2 publications

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“…However, our findings for earnings volatility are inconsistent with the liquidation efficiency hypothesis where risk should be negatively correlated with public debt given the difficulty in renegotiating across dispersed public bondholders. This is consistent with Barnes and Cahill () who find that UK firms with higher earnings volatility are more likely to borrow in public debt markets. We find no relationship between leverage and public debt use, which is inconsistent with Johnson ().…”

Section: Analysis Of Existing Debt MIXsupporting

confidence: 91%

“…2 See Houston and James (1996) and Hadlock and James (2002) for US evidence on the choice between public and private securities and Barnes and Cahill (2005) and Antoniou et al (2008) for UK firms. A small number of studies have examined the choice of public bond financing relative to syndicated bank loans (Altunbas et al, 2009) and syndicated loans relative to bilateral loans (Dennis and Mullineaux, 2000;Marsh, 2006;Sufi, 2007).…”

Section: Introductionmentioning

confidence: 99%

“…See Houston and James () and Hadlock and James () for US evidence on the choice between public and private securities and Barnes and Cahill () and Antoniou et al. () for UK firms.…”

mentioning

confidence: 99%

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The Choice of Debt Source by UK Firms

Marshall¹,

McCann

McColgan³

2016

Business Fin & Account

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We examine the choice of borrowing source among public debt, syndicated bank loans, bilateral bank loans and non‐bank private debt. Using a sample of 400 non‐financial firms over the period 2000–2012, we find strong support for the reputational theory of borrowing source. Larger firms are more likely to borrow in public debt markets. Bank dependent firms are less likely to borrow in public debt markets and choose between bank and non‐bank private debt based on maturity, collateral available to lenders and other firm characteristics. These results are consistent with the role of borrower reputation being the primary determinant of borrowing source for UK listed firms.

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Section: Analysis Of Existing Debt MIXsupporting

confidence: 91%

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

The Choice of Debt Source by UK Firms

Marshall¹,

McCann

McColgan³

2016

Business Fin & Account

View full text Add to dashboard Cite

show abstract

“…However, our findings for earnings volatility are inconsistent with the liquidation efficiency hypothesis where risk should be negatively correlated with public debt given the difficulty in renegotiating across dispersed public bondholders. This finding is consistent with Barnes and Cahill (2005) for their UK sample. We find no relation between leverage and public debt use, which is inconsistent with Johnson (1997).…”

Section: (Ii) Determinants Of Existing Debt Sourcing MIXsupporting

confidence: 86%

Section: Introductionmentioning

confidence: 99%

The Choice of Debt Source for UK Firms

2012

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We examine the choice of borrowing source between public debt, syndicated bank loans, bilateral bank loans, and non-bank private debt. Using a sample of 400 non-financial firms over 2000-2012, we find strong support for the reputational theory of borrowing source. Larger firms are more likely to borrow in public debt markets. Bank dependent firms are less likely to borrow in public debt markets and choose between bank and non-bank private debt based on maturity, collateral available to lenders, and other firm characteristics. These results are consistent with the role of borrower reputation being the primary determinant of borrowing source for UK listed firms.

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Private or Public Debt? The Drivers of Debt Priority Structure for UK Firms

Cited by 2 publications

References 0 publications

The Choice of Debt Source by UK Firms

The Choice of Debt Source by UK Firms

The Choice of Debt Source for UK Firms

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