Public Firm Borrowers of the US Paycheck Protection Program

44 Pages Posted: 3 May 2020 Last revised: 20 Jan 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), with 30.3% of those eligible choosing to borrow. Consistent with the program's objectives, borrowers tended to be smaller, have less cash, have 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 further document that 17.7% of PPP borrowers, in particular the healthier firms, returned their loan after public backlash. Overall, concerns of reputational harm from public disclosure appeared to prevent eligible firms from availing emergency government funding.

Keywords: PPP, SBA, COVID

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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