Dianna Preece

Monitoring, loan renegotiability, and firm value: The role of lending syndicates

Abstract The positive response in capital markets to announcements of private financings is well documented and typically rationalized as a reflection of valuable monitoring and screening services provided by banks and other private lenders. This paper investigates the hypothesis that the capacity to renegotiate private debt contracts relatively inexpensively complements monitoring as a source of value to borrowers. The context for our study is lending by syndicates of private lenders. As the number of lenders increases, contracting costs increase and the value associated with the capacity to renegotiate should decline. Our evidence supports this hypothesis. We conduct additional tests to determine whether our results are robust to alternative interpretations, such as information leakage or the prospect that syndicate size proxies for information-related variables. Syndicate size remains related to the scale of the markets reaction, after taking various borrower and loan characteristics into account.

Monitoring by financial intermediaries: Banks vs. Nonbanks

Recent empirical evidence indicates that captical markers respond positively to debt-financing announcements in the form of loan agreements. Nonbank firms, prompted largely by technological and telecommunications advances, have also entered the commercial lending market in recent years. This article finds evidence that borrowing firms experience positive abnormal returns upon announcing conclusions of loan agreements with nonbank firms. Our evidence suggests that nonbanks have replicated some of the unique attributes formerly enjoyed only by banks.

Family friendly firms: does it pay to care?

Abstract In this paper we examine the returns to a portfolio of 29 firms that are perceived as family-oriented. The sample is based on firms awarded the best 100 companies for working mothers in Working Mother Magazine’s annual survey. There is much anecdotal evidence supporting the benefits of these programs, but little evidence relating family-oriented policies to shareholder wealth. We find, based on raw returns, that family-friendly firms do not earn statistically significant excess returns relative to a matched sample or to the S & P 500. Based on risk-adjusted returns, the family-friendly portfolio outperforms the market, but underperforms a matched sample portfolio.

Community banks and deposit market share growth

Purpose – The purpose of this paper is to examine whether community banks have gained market share at the expense of larger, regional banks in small metropolitan statistical areas (MSAs). The authors also seek to examine market share gains of community banks relative to each other.Design/methodology/approach – The empirical research is conducted using deposit and market share data for community and regional banks between 2001 and 2008. The authors employ regression analysis.Findings – It is found that community banks have gained market share. When regional banks are excluded and the market share gains of community banks relative to each other examined it is found that community banks with lower market shares gain relative to banks with a larger initial share of the deposit market.Research limitations/implications – Research is conducted using eight metropolitan statistical areas (MSAs) in Wisconsin, Minnesota, and Iowa. Thus, conclusions drawn are based on analysis conducted in one region of the United St...

Announcement Effects Of Working Mother Annual Survey Of Family-Friendly Firms

An increasing number of firms are adopting family-friendly policies as a means of improving morale and increasing the productivity of their workforce. Firms adopting such policies are often lauded for their concern for their workers. Beginning in 1986, Working Mother magazine began publishing an annual survey of the 100 best companies for working mothers to recognize those firms with exemplary family-friendly policies. Implementing family-friendly strategies can be quite costly. While workers may find these companies attractive, does the market find that the potential benefits of these programs outweigh their costs? In this article, the authors examine the stock markets reaction to firms that are listed on Working Mothers annual survey. They find that the market reacts negatively to announcements of firms that are included in the survey.