Public Firm Borrowers of the US Paycheck Protection Program

50 Pages Posted: 3 May 2020 Last revised: 26 Mar 2021

See all articles by Anna Cororaton

Anna Cororaton

Southern Methodist University (SMU) - Finance Department

Samuel Rosen

Temple University, Fox School of Business

Date Written: April 30, 2020

Abstract

We document that nearly half of public firms were eligible for the Paycheck Protection Program (PPP) in 2020, with 46.1% of those eligible choosing to borrow. Consistent with the program's objectives, borrowers tended to be smaller with less cash, higher leverage, and fewer investment opportunities. In addition, they faced negative profits in the second quarter of 2020 and their firm values declined upon PPP loan announcement. We find that 13.5% of PPP borrowers, in particular the healthier firms, returned their loans after public backlash. Overall, concerns of reputational harm appeared to dissuade eligible public firms from availing emergency government funding.

Keywords: CARES Act, SBA, government emergency policy, firm reputation

JEL Classification: E61, E65, G38, H81

Suggested Citation

Cororaton, Anna and Rosen, Samuel, Public Firm Borrowers of the US Paycheck Protection Program (April 30, 2020). Available at SSRN: https://ssrn.com/abstract=3590913 or http://dx.doi.org/10.2139/ssrn.3590913

Anna Cororaton

Southern Methodist University (SMU) - Finance Department ( email )

United States

Samuel Rosen (Contact Author)

Temple University, Fox School of Business ( email )

Fox School of Business and Management
Philadelphia, PA 19122
United States

HOME PAGE: http://sites.google.com/view/samuel-rosen/

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