Bermpei, Theodora and Kalyvas, Antonios Nikolaos and Wolfe, Simon (2023) Does IRS Monitoring Matter for the Cost of Bank Loans? Journal of Financial Services Research, 65 (2-3). pp. 153-188. DOI https://doi.org/10.1007/s10693-023-00403-9
Bermpei, Theodora and Kalyvas, Antonios Nikolaos and Wolfe, Simon (2023) Does IRS Monitoring Matter for the Cost of Bank Loans? Journal of Financial Services Research, 65 (2-3). pp. 153-188. DOI https://doi.org/10.1007/s10693-023-00403-9
Bermpei, Theodora and Kalyvas, Antonios Nikolaos and Wolfe, Simon (2023) Does IRS Monitoring Matter for the Cost of Bank Loans? Journal of Financial Services Research, 65 (2-3). pp. 153-188. DOI https://doi.org/10.1007/s10693-023-00403-9
Abstract
We show that IRS monitoring exerts a significantly negative effect on the cost of syndicated loans. A one standard deviation increase in the probability of an IRS audit decreases loan spreads by around nine basis points. We also find that this effect is stronger for borrowers with better lending relationships and credible access to public markets. These results indicate that IRS monitoring could increase the bargaining power of borrowers and restrain banks from extracting informational rents from their lending relationships. Thus, they provide a novel insight into how IRS monitoring could lower the cost of financing from the banking system.
Item Type: | Article |
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Uncontrolled Keywords: | information asymmetry; IRS; loan pricing; syndicated loans; tax enforcement |
Divisions: | Faculty of Social Sciences Faculty of Social Sciences > Essex Business School |
SWORD Depositor: | Unnamed user with email elements@essex.ac.uk |
Depositing User: | Unnamed user with email elements@essex.ac.uk |
Date Deposited: | 15 Mar 2023 15:20 |
Last Modified: | 16 May 2024 20:50 |
URI: | http://repository.essex.ac.uk/id/eprint/34977 |
Available files
Filename: s10693-023-00403-9.pdf
Licence: Creative Commons: Attribution 4.0