Does Information Technology Reputation Affect Bank Loan Terms?

• 成果类型: Article
• 署名作者: Kim, Jeong-Bon; Song, Byron Y.; Stratopoulos, Theophanis C.
• 署名单位: City University of Hong Kong; University of Waterloo; Hong Kong Baptist University
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/accr-51927
• 发表日期: 2018
• 页码: 185-211
• 关键词: financial-reporting quality; internal control weakness; institutional investors; Competitive advantage; CORPORATE REPUTATION; contracting evidence; company reputation; firm performance; audit-quality; earnings

摘要

This study investigates whether Information Technology (IT) reputation, captured by the accumulation of consistent IT capability signals, influences bank loan contracting even though banks have access to inside information. We predict that IT reputation is associated with better loan terms because it lowers credit risk via its impact on default and information risks. Results based on 4,218 loan facility-years reveal, as predicted, that firms with a reputation for IT capability tend to have more favorable price and non-price terms for loan contracts and are less likely to have their credit rating downgraded or to report internal control weaknesses than firms with no IT reputation. The study contributes to the banking and IT business value literature by showing that banks incorporate borrowers' nonfinancial characteristics, such as IT reputation, into loan contracting terms.