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Online Reputation and Debt Capacity
- Source :
- SSRN Electronic Journal.
- Publication Year :
- 2020
- Publisher :
- Elsevier BV, 2020.
-
Abstract
- This paper explores the effects of online customer ratings on debt capacity. Using a large sample of Parisian restaurants, we find a positive and economically significant relation between customer ratings and bank debt. We use the locally exogenous variation in customer ratings resulting from the rounding of scores in regression discontinuity tests to establish causality. Customer ratings affect financial policy through a reduction in cash flow risk and higher resilience to demand shocks. Restaurants with good ratings use their extra debt capacity to invest in tangible assets. Finally, favorable online ratings relax credit constraints mostly for moderately constrained restaurants.
- Subjects :
- Economics and Econometrics
media_common.quotation_subject
education
Monetary economics
online reputation
Affect (psychology)
Information asymmetry
Accounting
Debt
0502 economics and business
customer ratings
050207 economics
health care economics and organizations
media_common
050208 finance
corporate debt
05 social sciences
corporate investment
JEL: L - Industrial Organization/L.L1 - Market Structure, Firm Strategy, and Market Performance/L.L1.L15 - Information and Product Quality • Standardization and Compatibility
JEL: G - Financial Economics/G.G3 - Corporate Finance and Governance/G.G3.G32 - Financing Policy • Financial Risk and Risk Management • Capital and Ownership Structure • Value of Firms • Goodwill
humanities
JEL: G - Financial Economics/G.G1 - General Financial Markets/G.G1.G14 - Information and Market Efficiency • Event Studies • Insider Trading
Demand shock
Regression discontinuity design
[SHS.GESTION]Humanities and Social Sciences/Business administration
Cash flow
JEL: L - Industrial Organization/L.L8 - Industry Studies: Services/L.L8.L83 - Sports • Gambling • Restaurants • Recreation • Tourism
Psychological resilience
Business
Finance
Reputation
Subjects
Details
- ISSN :
- 15565068
- Database :
- OpenAIRE
- Journal :
- SSRN Electronic Journal
- Accession number :
- edsair.doi.dedup.....51acb6a6e31acdd844072fa27798fe17