The effects of reporting standards and information sharing on loan contracting: Cross-country evidence

Figures & data

Table 1. Variables description

Variables	Definition and construction
$Loan\mathrm{\_}spread$ (bps)	The weighted average spread (with loan amount as weights) of all loans taken by a firm in a year (All in spread drawn)
$Secured$	Dummy variable that takes the value 1 if the deal is secured by any collateral and 0 otherwise
$Covenants$	Dummy variable that takes the value 1 if the deal has any covenants and 0 otherwise
$Log\mathrm{\_}amount$	The logarithm of the aggregate loans (sum of all loans in millions of US dollar) obtained by a firm in a year
$Log\mathrm{\_}maturity$	The logarithm of the weighted average maturity (with loan amount as weights) of all loans taken during a year by a firm
$Num\mathrm{\_}lenders$	Total number of participating lenders in the syndicate
$Foreign\mathrm{\_}bank$	Dummy variable that takes the value 1 if there is atleast one foreign bank participant in the syndicate and 0 if it comprises exclusively of domestic banks. This dummy variable is constructed by matching the lender operating country with the borrower firm’s country of domicile.
$Leadbank\mathrm{\_}asset$	The logarithm of the average total assets (in millions USD) of the lead banks in the syndicate. The simple average is used as the majority of loans in the DealScan database do not have proportional shares of lead banks. Bank name based match is done with Moody’s Analytics BankFocus database and the DealScan database.
$Leadbank\mathrm{\_}NIM$	The average net interest margin (NIM) of the lead banks in the syndicate. A similar matching approach employed for $Leadbank\mathrm{\_}asset$ is used to compute the average NIM.
$Firm\mathrm{\_}risk$	The weighted average of the numeric equivalent of firm ratings (with loan amount as weights) for all loans taken by a firm in a year. We use an ordinal rating scale, where 1 refers to AAA rating and 22 refers to D rating. The rating for each loan is the average of the Long-term Issuer ratings provided by S&P, Moody’s and Fitch.
$Spec\mathrm{\_}dum$	Dummy variable that takes the value 1 if the rating corresponds to speculative grade (BB- or lower) category and and 0 otherwise
$ReportingStd$	Index of strength of financial auditing and reporting standards, with a score ranging from 1 to 7 obtained from the Global Competitiveness database of the World Economic Forum. A measure of the quality of hard information in a country.
$DepthCreditInfo$	Index measuring rules and practices affecting the coverage, scope and accessibility of credit information available through either a credit bureau or a credit registry, with a score ranging from 0 to 8 obtained from World Bank Doing business rankings. A measure of the extent of information sharing in a country.
EPC	Economic policy uncertainty index obtained from the database maintained by Baker et al. (2016)

Table 2. Descriptive statistics

Variable	Obs.	Mean	Std. Dev	Median	P10	P90	Min	Max
All firms
Loan-specific
$Loan\mathrm{\_}spread$	8,127	232.66	155.64	195.00	75.00	450.00	7.00	1225.00
$Secured$	8,127	0.50	0.50	0.00	0.00	1.00	0.00	1.00
$Covenants$	8,127	0.42	0.49	0.00	0.00	1.00	0.00	1.00
$Log\mathrm{\_}amount$	8,127	6.63	1.17	6.62	5.19	8.11	1.95	11.34
$Log\mathrm{\_}maturity$	8,127	3.99	0.38	4.11	3.58	4.36	2.48	6.58
Syndicate structure
$Num\mathrm{\_}lenders$	8,127	9.20	7.31	7.00	2.00	19.00	1.00	94.00
$Foreign\mathrm{\_}bank$	8,127	0.83	0.38	1.00	0.00	1.00	0.00	1.00
$Leadbank\mathrm{\_}asset$	8,127	14.12	0.61	14.27	13.60	14.59	8.68	15.06
$Leadbank\mathrm{\_}NIM$	8,127	2.26	0.86	2.21	1.20	3.25	−1.81	8.21
Firm-specific
$Firm\mathrm{\_}risk$	8,127	11.60	3.19	12.00	7.00	15.00	1.00	22.00
$Spec\mathrm{\_}dum$	8,127	0.60	0.49	1.00	0.00	1.00	0.00	1.00
Country-specific
$DepthCreditInfo$	8,127	6.48	1.10	6.00	6.00	8.00	0.00	8.00
$ReportingStd$	7,491	5.50	0.37	5.45	5.19	5.87	3.66	6.73
$EPU$	8,032	129.14	37.42	139.38	79.71	157.98	27.00	364.83
Non-US firms
Loan-specific
$Loan\mathrm{\_}spread$	1,014	207.19	146.26	175.00	55.00	411.80	7.00	900.00
$Secured$	1,014	0.32	0.47	0.00	0.00	1.00	0.00	1.00
$Covenants$	1,014	0.13	0.34	0.00	0.00	1.00	0.00	1.00
$Log\mathrm{\_}amount$	1,014	6.91	1.26	6.91	5.30	8.51	2.71	10.92
$Log\mathrm{\_}maturity$	1,014	3.90	0.43	4.08	3.36	4.33	2.48	6.58
Syndicate structure
$Num\mathrm{\_}lenders$	1,014	10.86	9.52	8.00	3.00	21.00	1.00	94.00
$Foreign\mathrm{\_}bank$	1,014	0.97	0.16	1.00	1.00	1.00	0.00	1.00
$Leadbank\mathrm{\_}asset$	1,014	14.06	0.63	14.23	13.56	14.55	10.38	15.06
$Leadbank\mathrm{\_}NIM$	1,014	1.81	0.71	1.69	0.99	2.82	0.06	6.60
Firm-specific
$Firm\mathrm{\_}risk$	1,014	10.65	3.07	10.00	7.00	15.00	3.00	22.00
$Spec\mathrm{\_}dum$	1,014	0.48	0.50	0.00	0.00	1.00	0.00	1.00
Country-specific
$DepthCreditInfo$	1,014	5.73	1.80	6.00	4.00	8.00	0.00	8.00
$ReportingStd$	957	5.63	0.71	5.93	4.53	6.31	3.66	6.73
$EPU$	919	159.27	64.59	151.81	73.98	243.62	27.00	364.83

Table 3. Effect of Information quality and sharing on loan spreads

	Baseline			Effects under uncertainty
	(1)	(2)	(3)	(4)	(5)	(6)
$Firm\mathrm{\_}Rating\times Reporting\mathrm{\_}Std$	−5.824***		−5.081***	−1.593		0.796
	(1.357)		(1.634)	(1.578)		(2.067)
$Firm\mathrm{\_}Rating\times DepthCreditInfo$		−1.222***	−0.367		−1.167***	−0.842
		(0.431)	(0.510)		(0.435)	(0.576)
$Firm\mathrm{\_}Rating\times EPU$				1.166***	0.347***	1.105***
				(0.201)	(0.074)	(0.203)
$Firm\mathrm{\_}Rating\times Reporting\mathrm{\_}Std\times EPU$				−0.201***		−0.163***
				(0.035)		(0.042)
$Firm\mathrm{\_}Rating\times DepthCreditInfo\times EPU$					−0.048***	−0.022
					(0.011)	(0.014)
$Firm\mathrm{\_}Rating$	60.607***	35.653***	58.877***	36.591***	35.938***	29.000***
	(7.676)	(2.960)	(8.070)	(8.893)	(3.034)	(9.886)
$Secured$	12.192**	12.136**	12.279**	12.506**	11.853**	12.485**
	(5.127)	(4.763)	(5.115)	(5.084)	(4.768)	(5.073)
$Covenants$	−5.795	−6.408*	−5.893	−6.052*	−5.818*	−6.283*
	(3.654)	(3.400)	(3.630)	(3.615)	(3.391)	(3.593)
$Log\mathrm{\_}amount$	7.226***	7.623***	7.161***	7.132***	8.124***	7.114***
	(2.021)	(1.932)	(2.014)	(2.012)	(1.917)	(2.011)
$Log\mathrm{\_}maturity$	5.264	4.07	5.056	5.131	4.035	4.939
	(3.479)	(3.290)	(3.480)	(3.446)	(3.272)	(3.439)
$Num\mathrm{\_}lenders$	−1.260***	−1.287***	−1.266***	−1.261***	−1.265***	−1.270***
	(0.190)	(0.177)	(0.190)	(0.187)	(0.175)	(0.187)
$Foreign\mathrm{\_}bank$	−4.711	−4.249	−4.615	−4.62	−5.22	−4.5
	(4.455)	(4.222)	(4.462)	(4.461)	(4.207)	(4.469)
$Leadbank\mathrm{\_}asset$	−12.331***	−12.499***	−12.441***	−11.828***	−12.166***	−12.052***
	(3.918)	(3.625)	(3.924)	(3.893)	(3.588)	(3.894)
$Leadbank\mathrm{\_}NIM$	−15.864***	−16.701***	−15.969***	−15.733***	−15.902***	−15.849***
	(3.273)	(2.977)	(3.278)	(3.265)	(2.953)	(3.268)
$Constant$	−226.519***	2.571	−224.475***	−6.027	24.15	−0.188
	(72.982)	(61.848)	(73.241)	(67.565)	(61.426)	(68.014)
Firm-year obs.	7,493	8,127	7,491	7,398	8,032	7,398
$Firms$	2,643	2,785	2,643	2,596	2,736	2,596
Firm fixed effects	Yes	Yes	Yes	Yes	Yes	Yes
Year fixed effects	Yes	Yes	Yes	Yes	Yes	Yes
Country-year fixed effects	Yes	Yes	Yes	Yes	Yes	Yes
$Adj\mathrm{\_}{R}^2$	0.346	0.383	0.345	0.349	0.387	0.349

The dependent variable in the estimations is the weighted average spread on drawn funds for the borrower in the year $t$. $Firm\mathrm{\_}risk$ is based on the average rating across the three rating agencies. Issuer rating provided by each agency is treated as an ordinal variable which takes a value between 1 and 22, where 1 refers to a AAA rated firm and 22 refers to a D rated firm. Robust standard errors clustered at the firm-level are presented in the brackets. ***, ** and * indicate p-values at 1%, 5% and 10% levels, respectively. Economic policy uncertainty ($EPU$) is centered relative to the sample mean in the estimations. Detailed definitions of the variables are given in Table 1.

Table 4. Robustness: Alternative risk category, exclusion of financial crisis years, and US dollar loans

	Alternative risk category				Excluding crisis years				USD loans
	(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)	(9)	(10)	(11)	(12)
$Spec\mathrm{\_}dum\times ReportingStd$	−19.950***		0.447
	(7.389)		(8.723)
$Spec\mathrm{\_}dum\times DepthCreditInfo$		−8.021***		−7.751***
		(2.036)		(2.020)
$Spec\mathrm{\_}dum\times EPU$			5.645***	1.642***
			(1.155)	(0.421)
$Spec\mathrm{\_}dum\times ReportingStd\times EPU$			−0.983***
			(0.205)
$Spec\mathrm{\_}dum\times DepthCreditInfo\times EPU$				−0.236***
				(0.065)
$Firm\mathrm{\_}risk\times ReportingStd$					−7.368***		−3.835**		−5.675***		−1.52
					(1.440)		(1.672)		(1.380)		(1.611)
$Firm\mathrm{\_}risk\times DepthCreditInfo$						−1.165***		−1.114**		−1.150***		−1.225***
						(0.429)		(0.434)		(0.445)		(0.438)
$Firm\mathrm{\_}risk\times EPU$							1.005***	0.350***			1.143***	0.325***
							(0.198)	(0.075)			(0.240)	(0.093)
$Firm\mathrm{\_}risk\times ReportingStd\times EPU$							−0.175***				−0.197***
							(0.035)				(0.043)
$Firm\mathrm{\_}risk\times DepthCreditInfo\times EPU$								−0.048***				−0.044***
								(0.011)				(0.015)
$Spec\mathrm{\_}dum$	152.440***	101.359***	35.811	103.099***
	(41.474)	(14.576)	(49.132)	(14.495)
$Firm\mathrm{\_}risk$					68.309***	34.300***	48.105***	34.772***	59.916***	35.263***	36.380***	36.422***
					(7.908)	(2.912)	(9.029)	(3.023)	(7.773)	(3.043)	(9.088)	(3.089)
$Secured$	22.083***	23.580***	22.123***	23.211***	7.212	7.787	7.808	7.448	13.392**	13.004***	13.456**	12.517**
	(5.868)	(5.447)	(5.832)	(5.439)	(5.346)	(4.967)	(5.322)	(4.983)	(5.286)	(4.923)	(5.248)	(4.943)
$Covenants$	−5.576	−6.397*	−5.793	−5.975	−8.219**	−8.248**	−8.476**	−7.652**	−6.055	−6.676*	−6.177*	−6.039*
	(3.914)	(3.648)	(3.886)	(3.632)	(3.808)	(3.524)	(3.770)	(3.516)	(3.725)	(3.467)	(3.685)	(3.461)
$Log\mathrm{\_}amount$	6.667***	6.833***	6.629***	7.049***	6.436***	7.111***	6.314***	7.651***	6.667***	7.209***	6.605***	7.655***
	(2.067)	(1.978)	(2.062)	(1.969)	(2.001)	(1.926)	(1.987)	(1.908)	(2.091)	(1.996)	(2.084)	(1.980)
$Log\mathrm{\_}maturity$	4.067	3.004	3.885	3.149	5.913	4.941	5.556	5.208	5.429	4.388	5.537	4.443
	(3.768)	(3.620)	(3.749)	(3.601)	(3.698)	(3.473)	(3.667)	(3.449)	(3.522)	(3.336)	(3.493)	(3.319)
$Num\mathrm{\_}lenders$	−1.564***	−1.633***	−1.574***	−1.624***	−1.096***	−1.150***	−1.089***	−1.123***	−1.239***	−1.284***	−1.249***	−1.256***
	(0.217)	(0.203)	(0.216)	(0.203)	(0.179)	(0.168)	(0.177)	(0.166)	(0.195)	(0.181)	(0.193)	(0.180)
$Foreign\mathrm{\_}bank$	−4.71	−4.672	−4.608	−5.193	−8.827**	−8.355**	−8.817**	−9.456**	−4.571	−4.028	−4.449	−4.982
	(4.741)	(4.477)	(4.740)	(4.472)	(4.393)	(4.205)	(4.395)	(4.199)	(4.523)	(4.294)	(4.532)	(4.278)
$Leadbank\mathrm{\_}asset$	−13.917***	−14.454***	−13.600***	−14.355***	−11.663***	−11.408***	−11.298***	−11.128***	−12.648***	−12.840***	−12.051***	−12.581***
	(4.106)	(3.778)	(4.092)	(3.762)	(4.150)	(3.789)	(4.142)	(3.750)	(4.033)	(3.745)	(4.005)	(3.703)
$Leadbank\mathrm{\_}NIM$	−16.940***	−17.269***	−16.748***	−16.896***	−16.579***	−17.420***	−16.639***	−16.537***	−15.973***	−16.837***	−15.919***	−16.023***
	(3.228)	(2.950)	(3.219)	(2.935)	(3.433)	(3.082)	(3.431)	(3.061)	(3.318)	(3.019)	(3.314)	(2.993)
$Constant$	104.038	328.960***	318.620***	327.498***	−218.423***	6.272	11.672	24.404	−220.628***	8.148	−4.996	30.23
	(70.996)	(58.130)	(62.846)	(57.846)	(76.308)	(64.256)	(71.773)	(63.711)	(74.798)	(63.537)	(69.148)	(63.069)
Firm-year obs.	7,493	8,127	7,398	8,032	6,970	7,604	6,889	7,523	7,220	7,835	7,127	7,742
$Firms$	2,643	2,785	2,596	2,736	2,567	2,720	2,527	2,679	2,528	2,664	2,483	2,617
Firm fixed effects	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Year fixed effects	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Country-year fixed effects	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Adj_R^2	0.291	0.33	0.292	0.331	0.318	0.353	0.32	0.359	0.344	0.381	0.346	0.386

The dependent variable in the estimations is the weighted average spread on drawn funds for the borrower in the year $t$. $Firm\mathrm{\_}risk$ is based on the average rating across the three rating agencies. Issuer rating provided by each agency is treated as an ordinal variable which takes a value between 1 and 22, where 1 refers to a AAA rated firm and 22 refers to a D rated firm. Economic policy uncertainty ($EPU$) is centered (relative to the sample mean). Robust standard errors clustered at the firm-level are presented in the brackets. ***, ** and * indicate p-values at 1%, 5% and 10% levels, respectively. Detailed definitions of the variables are given in Table 1.

Table 5. Results for non-US firms

	Non-US firms—All loans				Non-US firms—USD loans
	(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)
$Firm\mathrm{\_}risk\times ReportingStd$	−19.113***		−14.634***		−19.762***		−17.777***
	(4.788)		(5.274)		(6.404)		(6.795)
$Firm\mathrm{\_}risk\times DepthCreditInfo$		−3.686***		−0.581		−4.226**		−2.225
		(1.074)		(1.495)		(1.722)		(1.914)
$Firm\mathrm{\_}risk\times EPU$			0.790***	0.372**			0.596*	0.408**
			(0.299)	(0.146)			(0.357)	(0.194)
$Firm\mathrm{\_}risk\times ReportingStd\times EPU$			−0.137***				−0.104*
			(0.050)				(0.060)
$Firm\mathrm{\_}risk\times DepthCreditInfo\times EPU$				−0.056***				−0.060**
				(0.020)				(0.026)
$Firm\mathrm{\_}risk$	128.749***	38.221***	103.317***	21.294**	129.471***	38.972***	118.412***	27.783**
	(28.214)	(8.703)	(30.536)	(9.007)	(36.268)	(11.804)	(38.081)	(10.833)
$Secured$	−22.453	−17.401	−20.484	−19.822	−24.297	−17.082	−25.395	−24.199
	(17.902)	(17.447)	(18.852)	(17.340)	(22.740)	(23.334)	(24.170)	(23.981)
$Covenants$	15.746	11.631	18.228	13.524	11.472	1.106	18.399	5.033
	(21.699)	(21.172)	(21.077)	(20.500)	(27.360)	(28.104)	(26.772)	(25.912)
$Log\mathrm{\_}amount$	15.644***	14.525**	15.114***	14.772***	13.840*	14.915**	13.509*	15.235**
	(5.456)	(6.098)	(5.093)	(5.584)	(7.192)	(7.099)	(7.087)	(6.909)
$Log\mathrm{\_}maturity$	7.109	−0.172	4.377	1.127	6.325	−0.715	5.258	2.734
	(16.246)	(15.242)	(16.816)	(15.467)	(18.986)	(17.787)	(19.822)	(18.215)
$Num\mathrm{\_}lenders$	−1.125**	−1.032**	−1.176**	−1.177**	−1.150*	−1.233**	−1.280**	−1.405**
	(0.473)	(0.453)	(0.471)	(0.467)	(0.593)	(0.606)	(0.605)	(0.629)
$Foreign\mathrm{\_}bank$	1.067	−0.295	−1.868	−3.368	24.214	26.457	21.739	18.256
	(20.872)	(21.251)	(19.980)	(21.061)	(42.937)	(41.750)	(40.597)	(40.097)
$Leadbank\mathrm{\_}asset$	−1.78	−9.136	−1.18	−7.433	−7.47	−19.955	−5.406	−20.064
	(11.699)	(12.144)	(11.877)	(11.849)	(19.356)	(22.652)	(19.208)	(22.259)
$Leadbank\mathrm{\_}NIM$	−4.323	−6.607	−2.632	−5.128	−0.734	−2.993	−0.841	−2.123
	(8.355)	(9.288)	(8.130)	(8.882)	(9.870)	(10.804)	(9.726)	(10.422)
$Constant$	−431.321*	−38.644	−36.868	99.218	−352.743	109.743	−146.825	271.004
	(235.304)	(262.198)	(257.388)	(261.698)	(324.012)	(388.453)	(284.474)	(393.479)
Firm-year obs.	959	1,014	864	919	739	778	646	685
$Firms$	462	487	415	438	352	370	307	323
Firm fixed effects	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Year fixed effects	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Country-year fixed effects	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
0.502	0.472	0.477	0.458	0.484	0.445	0.444	0.424

The dependent variable in the estimations is the weighted average spread on drawn funds for the borrower in the year $t$. $Firm\mathrm{\_}risk$ is based on the average rating across the three rating agencies. Issuer rating provided by each agency is treated as an ordinal variable which takes a value between 1 and 22, where 1 refers to a AAA rated firm and 22 refers to a D rated firm. Economic policy uncertainty ($EPU$) is centered (relative to the sample mean). Robust standard errors clustered at the firm-level are presented in the brackets. ***, ** and * indicate p-values at 1%, 5% and 10% levels, respectively. Detailed definitions of the variables are given in Table 1.

Table A1. Baseline regression with standardized variables

	Baseline			Effects under uncertainty
	(1)	(2)	(3)	(4)	(5)	(6)
$Firm\mathrm{\_}Rating\times Reporting\mathrm{\_}Std$	-0.044***		-0.039***	-0.012		0.006
	(0.010)		(0.012)	(0.012)		(0.016)
$Firm\mathrm{\_}Rating\times DepthCreditInfo$		-0.028***	-0.008		-0.025***	-0.019
		(0.010)	(0.011)		(0.010)	(0.013)
$Firm\mathrm{\_}Rating\times EPU$				0.041***	0.030***	0.045***
				(0.009)	(0.008)	(0.010)
$Firm\mathrm{\_}Rating\times Reporting\mathrm{\_}Std\times EPU$				-0.002***		-0.001***
				(0.000)		(0.000)
$Firm\mathrm{\_}Rating\times DepthCreditInfo\times EPU$					-0.001***	-0.001
					(0.000)	(0.000)
$Firm\mathrm{\_}Rating$	0.587***	0.569***	0.586***	0.578***	0.590***	0.581***
	(0.056)	(0.046)	(0.057)	(0.056)	(0.056)	(0.056)
$Secured$	0.078**	0.078**	0.079**	0.080**	0.077**	0.080**
	(0.033)	(0.031)	(0.033)	(0.033)	(0.033)	(0.033)
$Covenants$	-0.037	-0.041*	-0.038	-0.039*	-0.038*	-0.040*
	(0.023)	(0.022)	(0.023)	(0.023)	(0.023)	(0.023)
$Log\mathrm{\_}amount$	0.054***	0.057***	0.054***	0.053***	0.055***	0.053***
	(0.015)	(0.014)	(0.015)	(0.015)	(0.015)	(0.015)
$Log\mathrm{\_}maturity$	0.013	0.01	0.012	0.013	0.013	0.012
	(0.009)	(0.008)	(0.009)	(0.009)	(0.009)	(0.008)
$Num\mathrm{\_}lenders$	-0.059***	-0.060***	-0.059***	-0.059***	-0.060***	-0.060***
	(0.009)	(0.008)	(0.009)	(0.009)	(0.009)	(0.009)
$Foreign\mathrm{\_}bank$	-0.03	-0.027	-0.03	-0.03	-0.029	-0.029
	(0.029)	(0.027)	(0.029)	(0.029)	(0.029)	(0.029)
$Leadbank\mathrm{\_}asset$	-0.048***	-0.049***	-0.049***	-0.046***	-0.048***	-0.047***
	(0.015)	(0.014)	(0.015)	(0.015)	(0.015)	(0.015)
$Leadbank\mathrm{\_}NIM$	-0.087***	-0.092***	-0.088***	-0.087***	-0.087***	-0.087***
	(0.018)	(0.016)	(0.018)	(0.018)	(0.018)	(0.018)
$Constant$	-1.726***	-0.382***	-1.646***	-0.429***	-0.433***	-0.428***
	(0.127)	(0.040)	(0.162)	(0.038)	(0.038)	(0.038)
Firm-year obs.	7,491	8,127	7,491	7,398	7,398	7,398
$Firms$	2,643	2,785	2,643	2,596	2,596	2,596
Firm fixed effects	Yes	Yes	Yes	Yes	Yes	Yes
Year fixed effects	Yes	Yes	Yes	Yes	Yes	Yes
Country-year fixed effects	Yes	Yes	Yes	Yes	Yes	Yes
$Adj\mathrm{\_}{R}^2$	0.345	0.383	0.345	0.349	0.348	0.349

The dependent variable in the estimations is the weighted average spread on drawn funds for the borrower in year $t$. $Firm\mathrm{\_}risk$ is based on the average rating across the three rating agencies. Issuer rating provided by each agency is treated as an ordinal variable which takes a value between 1 and 22, where 1 refers to a AAA rated firm and 22 refers to a D rated firm. Economic policy uncertainty ($EPU$) is centered (relative to the sample mean). Robust standard errors clustered at the firm-level are presented in the brackets. ***, ** and * indicate p-values at 1%, 5% and 10% levels. Detailed definitions of the variables are given in Table 1.

Table A2. Baseline regression excluding loan-level controls

	(1)	(2)	(3)	(4)	(5)	(6)
$Firm\mathrm{\_}Rating\times Reporting\mathrm{\_}Std$	-6.680***		-6.493***	-3.141*		-0.821
	(1.370)		(1.660)	(1.651)		(2.227)
$Firm\mathrm{\_}Rating\times DepthCreditInfo$		-1.138***	-0.104		-1.167***	-0.713
		(0.439)	(0.523)		(0.451)	(0.608)
$Firm\mathrm{\_}Rating\times EPU$				0.814***	0.374***	0.793***
				(0.208)	(0.074)	(0.201)
$Firm\mathrm{\_}Rating\times Reporting\mathrm{\_}Std\times EPU$				-0.137***		-0.086**
				(0.036)		(0.039)
$Firm\mathrm{\_}Rating\times DepthCreditInfo\times EPU$					-0.051***	-0.041***
					(0.011)	(0.013)
$Firm\mathrm{\_}Rating$	68.943***	37.706***	68.574***	49.048***	38.736***	41.053***
	(8.208)	(3.234)	(8.565)	(9.823)	(3.315)	(10.975)
$Constant$	-278.936***	-195.236***	-278.937***	-188.174***	-114.095*	-181.190***
	(45.753)	(26.974)	(45.979)	(32.469)	(66.316)	(32.148)
Firm-year obs.	8,278	9,117	8,276	8,167	9,003	8,167
$Firms$	2,882	3,075	2,882	2,829	3,018	2,829
Firm fixed effects	Yes	Yes	Yes	Yes	Yes	Yes
Year fixed effects	Yes	Yes	Yes	Yes	Yes	Yes
Country-year fixed effects	Yes	Yes	Yes	Yes	Yes	Yes
$Adj\mathrm{\_}{R}^2$	0.344	0.373	0.343	0.344	0.377	0.345

The dependent variable in the estimations is the weighted average spread on drawn funds for the borrower in year $t$. $Firm\mathrm{\_}risk$ is based on the average rating across the three rating agencies. Issuer rating provided by each agency is treated as an ordinal variable which takes a value between 1 and 22, where 1 refers to a AAA rated firm and 22 refers to a D rated firm. Economic policy uncertainty ($EPU$) is centered (relative to the sample mean). Robust standard errors clustered at the firm-level are presented in the brackets. ***, ** and * indicate p-values at 1%, 5% and 10% levels. Detailed definitions of the variables are given in Table 1.

Baker, S. R., Bloom, N., & Davis, S. J. (2016). Measuring economic policy uncertainty. Quarterly Journal of Economics, 131(4), 1593–20. doi:10.1093/qje/qjw024

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