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AuthorBen-Nasr, Hamdi
Available date2020-05-14T09:55:46Z
Publication Date2019
Publication NameJournal of Corporate Finance
ResourceScopus
ISSN9291199
URIhttp://dx.doi.org/10.1016/j.jcorpfin.2019.01.006
URIhttp://hdl.handle.net/10576/14877
AbstractThis study examines whether labor unemployment risk affects the choice of debt source. Specifically, we examine whether US unemployment insurance (UI) benefits, which reduce unemployment risk, lead to a heavy reliance on bank debt. Through difference-in-difference analysis, we find that firms in states with generous UI benefits tend to rely more on bank debt, supporting the monitoring avoidance channel. This finding is robust to a battery of robustness tests. We also find that the positive relationship between UI benefits and bank debt ratio is more pronounced in firms from highly unionized states, labor-intensive firms, and firms with higher asset substitution risk. Finally, we find that debt maturity (security) decreases (increases) when UI benefits increase. - 2019 Elsevier B.V.
Languageen
PublisherElsevier B.V.
SubjectBank debt
Compensating wage differential
Labor unemployment insurance
Public debt
Unemployment risk
TitleDo unemployment benefits affect the choice of debt source?
TypeArticle
Pagination88-107
Volume Number56
dc.accessType Abstract Only


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