Online reputation and debt capacity

Derrien, François (HEC Paris, France) ; Garel, Alexandre (Audencia business school, France) ; Petit-Romec, Arthur (SKEMA business school, université Côte d'Azur, France) ; Weisskopf, Jean-Philippe (Ecole hôtelière de Lausanne, HES-SO // University of Applied Sciences Western Switzerland)

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 have more impact on debt capacity when information asymmetry is higher. They affect financial policy through a reduction in cash flow risk and greater resilience to demand shocks. Restaurants with good ratings use their extra debt capacity to invest in tangible assets.


Note: Due to the COVID-19 outbreak, the 17th Corporate Finance Day venue in Liège was cancelled. The proceedings of the online conference are however published according to the original schedule.


Keywords:
Conference Type:
full paper
Faculty:
Economie et Services
School:
EHL
Institute:
Aucun institut
Subject(s):
Economie/gestion
Publisher:
Liège, Belgium, 9 September 2020
Date:
2020-09
Liège, Belgium
9 September 2020
Pagination:
66 p.
Published in:
Proceedings of the 17th Corporate Finance Day
Appears in Collection:

Note: The status of this file is: restricted


 Record created 2020-11-03, last modified 2020-11-06

Fulltext:
Download fulltext
PDF

Rate this document:

Rate this document:
1
2
3
 
(Not yet reviewed)