Opacity of young businesses: Evidence from rating disagreements
- 作者：Ari Hyytinen ; Mika Pajarinen
- 关键词：Asymmetric information ; Opacity ; Small business finance ; Financial constraints
- 刊名：Journal of Banking and Finance
- 出版年：2008
- 期刊代码：30_03784266
- 类别：eco
- 出版时间：July 2008
- 卷：32
- 期：7
- 页码：1234-1241
- 文件大小：145 K
摘要
A conventional wisdom in the contemporary corporate finance literature argues that small and medium-sized enterprises (SMEs) are informationally opaque. We use data from two credit information companies and in particular their disagreements over the creditworthiness of SMEs to study the empirical relevance of this often invoked assumption. Our panel data analysis shows that once unobserved firm-effects are controlled for, the disagreements (i.e., rating splits) are inversely related to the age of firms. We are not able to document such a robust relationship between the disagreements and the size of firms. This finding holds a lesson for empirical corporate finance researchers who need firm-level proxies for informational imperfections and asymmetries: of the two often-used proxies, firm size is not as closely related to informational opacity as firm age is.