The Choice of Debt Source by UK Firms

36 Pages Posted: 29 Jul 2016

See all articles by Andrew P. Marshall

Andrew P. Marshall

University of Strathclyde - Strathclyde Business School

Laura McCann

University of Aberdeen

Patrick McColgan

University of Strathclyde

Date Written: May/June 2016

Abstract

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.

Keywords: debt policy, public debt, bilateral loans, syndicated loans, non‐bank private debt

Suggested Citation

Marshall, Andrew P. and McCann, Laura and McColgan, Patrick, The Choice of Debt Source by UK Firms (May/June 2016). Journal of Business Finance & Accounting, Vol. 43, Issue 5-6, pp. 729-764, 2016, Available at SSRN: https://ssrn.com/abstract=2815722 or http://dx.doi.org/10.1111/jbfa.12194

Andrew P. Marshall (Contact Author)

University of Strathclyde - Strathclyde Business School ( email )

100 Cathedral Street
Glasgow G4 0LN
United Kingdom
44 0141 548 3894 (Phone)

Laura McCann

University of Aberdeen ( email )

Edward Wright Building
Dunbar Street
Aberdeen, Scotland AB24 3QY
United Kingdom

Patrick McColgan

University of Strathclyde ( email )

Curran Building
100 Cathedral Street
Glasgow, G4 0LN
United Kingdom
+44 1415483690 (Phone)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
0
Abstract Views
981
PlumX Metrics