Investor Relations and Private Debt Markets

48 Pages Posted: 20 Jul 2023

See all articles by Kimball Chapman

Kimball Chapman

Arizona State University (ASU)

Ruby Lee

University of Florida - Fisher School of Accounting

Nayana Reiter

University of Toronto - Rotman School of Management

Christopher D. Williams

University of Michigan, Stephen M. Ross School of Business

Date Written: July 12, 2023

Abstract

We study whether investor relations (IR) is relevant in private debt markets. We find that firms with dedicated IR officers (IRO) have 7.6% (11 bps) lower spreads after controlling for common determinants of spreads and firm disclosure. The association is strongest when information asymmetry between the borrower and lenders is high and when there are higher levels of financial distress. Restricting the sample to only firms that have a dedicated IRO, we find that those with long-tenured IROs have 6.3% (8 bps) lower spreads than those with short-tenured IROs. The magnitude of the relation between IRO tenure and spreads is larger for firms with lender-focused IR, and when the IRO shares a finance-related role within the firm. We also find that spreads increase when there is IRO turnover. Our evidence suggests that the relevance of IR in private debt markets arises through both public and private information channels.

Suggested Citation

Chapman, Kimball and Lee, Ruby and Reiter, Nayana and Williams, Christopher D., Investor Relations and Private Debt Markets (July 12, 2023). Available at SSRN: https://ssrn.com/abstract=4508084 or http://dx.doi.org/10.2139/ssrn.4508084

Kimball Chapman

Arizona State University (ASU) ( email )

Farmer Building 440G PO Box 872011
Tempe, AZ 85287
United States

Ruby Lee

University of Florida - Fisher School of Accounting ( email )

Warrington College of Business
PO Box 117166
Gainesville, FL 32611-7166
United States

Nayana Reiter (Contact Author)

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

Christopher D. Williams

University of Michigan, Stephen M. Ross School of Business ( email )

701 Tappan Street
Ann Arbor, MI MI 48109
United States
(734)647-2842 (Phone)

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