Firm Location and Corporate Debt

43 Pages Posted: 4 Nov 2011 Last revised: 7 Dec 2017

See all articles by Matteo P. Arena

Matteo P. Arena

Marquette University

Michaël Dewally

Towson University - Department of Finance

Date Written: October 31, 2011


This study examines the influence of a firm’s geographical location on corporate debt and provides evidence that the higher cost of collecting information on firms distant from urban areas has significant implications on a wide array of corporate debt characteristics. We find that rural firms face higher debt yield spreads and attract smaller and less prestigious bank syndicates than urban firms. Rural firms attempt to reduce their informational disadvantage by relying more on relationship banking. Our results on the effect of location on corporate debt are robust to the inclusion of an extensive set of firm and issue characteristics.

Keywords: Corporate location, Debt underwriting, Cost of debt, Debt maturity, Capital structure

JEL Classification: G32, G21, G24

Suggested Citation

Arena, Matteo P. and Dewally, Michaël, Firm Location and Corporate Debt (October 31, 2011). Journal of Banking and Finance, Forthcoming. Available at SSRN:

Matteo P. Arena (Contact Author)

Marquette University ( email )

College of Business Administration
P.O. Box 1881
Milwaukee, WI 53201-1881
United States

Michaël Dewally

Towson University - Department of Finance ( email )

8000 York Road
Suite 316 L
Baltimore, MD 21252-0001
United States
410-704-4902 (Phone)

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