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Bank Loan Announcement Effects: Evidence from a Comprehensive 8-K Sample

Published online by Cambridge University Press:  31 January 2025

Steven Wei Ho Open the ORCID record for Steven Wei Ho [Opens in a new window] ,
Clark Liu  and
Shujing Wang Open the ORCID record for Shujing Wang [Opens in a new window]
Steven Wei Ho
Affiliation:
Department of Finance, University of Nevada, Las Vegas steven.ho@unlv.edu
Clark Liu
Affiliation:
PBC School of Finance, Tsinghua University liuyue@pbcsf.tsinghua.edu.cn
Shujing Wang*
Affiliation:
School of Economics and Management, Tongji University
*
shujingwang@connect.ust.hk (corresponding author)
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Abstract

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We investigate whether bank loan financing from 1994 to 2018 conveys valuable private information using a sample of over 10,000 bank loan announcements identified from 8-K filings. We show that the positive announcement effect is persistent and closely related to the information revealed in loan characteristics: The effect is stronger when deals have higher materiality, more favorable pricing, larger lead bank shares, and higher syndicate concentration. The effect is also stronger when lenders have higher credit quality and when credit market conditions are worse. The insignificant wealth effect documented in several early studies is potentially driven by small sample size.

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , First View , pp. 1 - 39
Creative Commons
Creative Common License - CCCreative Common License - BYCreative Common License - NCCreative Common License - ND
This is an Open Access article, distributed under the terms of the Creative Commons Attribution-NonCommercial-NoDerivatives licence (http://creativecommons.org/licenses/by-nc-nd/4.0), which permits non-commercial re-use, distribution, and reproduction in any medium, provided that no alterations are made and the original article is properly cited. The written permission of Cambridge University Press must be obtained prior to any commercial use and/or adaptation of the article.
Copyright
© The Author(s), 2025. Published by Cambridge University Press on behalf of the Michael G. Foster School of Business, University of Washington

Footnotes

Steven Wei Ho and Clark Liu are co-first authors.

We sincerely thank Ran Duchin (the editor) and the referee for the improvements of this paper. We also thank Matthew Billett, Daniel Chi, Francesco D’Acunto, Mark Flannery, Michelle Hanlon, Tien Trung Nguyen, Daniel Paravasini, Terrance Odean, Anthony Saunders, Tong Yu, and participants at the 2018 Conference on the Theories and Practices of Securities and Financial Markets, 2019 Paris Financial Management Conference, 2019 Australasian Finance and Banking Conference, 2021 AEA Poster Session, 2022 Financial Markets and Corporate Governance Conference, 2022 Asian FA Annual Meeting, and 2022 FMA Annual Meeting, for their valuable comments and suggestions. We acknowledge University of Nevada Las Vegas and Tsinghua University for research support. We also thank Shuyue Chen and doctoral students at Tongji University for their excellent RA work. All errors are our own.

Funding: Wang acknowledges financial support from the National Natural Science Foundation of China [Grant No. 72373110 and 71902140] and the Fundamental Research Funds for the Central Universities in China.

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