Are all types of real transaction management equal in the eyes of bank lenders?

• Published in: Journal of business finance & accounting Vol. 50; no. 3-4; pp. 680 - 715
• Main Authors: Chen, Po‐Chang, Moser, William J., Narayanamoorthy, Gans
• Format: Journal Article
• Language: English
• Published: Oxford Blackwell Publishing Ltd 01.03.2023
• Subjects: bank lenders; Bank loans; Borrowing; cash holdings; Collateral; Companies; debt covenants; Discounts; lending relationship; loan contracting; Loans; Maturity; private debt; probability of covenant violation; R&D; real transaction management; Research & development; Sales

This study examines whether bank lenders react differently to various types of real transaction management (RTM) by borrowing firms. Drawing upon the differential cash and cash flow effects of alternative forms of RTM, we predict and find that banks provide more favorable loan terms, that is, lower...