Financial analysts' career concerns and the cost of private debt

Bill Francis, Iftekhar Hasan, Liuling Liu, Qiang Wu, Yijiang Zhao

Research output: Journal article publicationJournal articleAcademic researchpeer-review

13 Citations (Scopus)


Career-concerned analysts are averse to firm risk. Not only does higher firm risk require more effort to analyze the firm, thus constraining analysts' ability to earn more remuneration through covering more firms, but it also jeopardizes their research quality and career advancement. As such, career concerns incentivize analysts to pressure firms to undertake risk-management activities, thus leading to a lower cost of debt. Consistent with our hypothesis, we find a negative association between analyst career concerns and bank loan spreads. In addition, our mediation analysis suggests that this association is achieved through the channel of reducing firm risk. Additional tests suggest that the effect of analyst career concerns on loan spreads is more pronounced for firms with higher analyst coverage. Our study is the first to identify the demand for risk management as a key channel through which analysts help reduce the cost of debt.

Original languageEnglish
Article number101868
JournalJournal of Corporate Finance
Publication statusPublished - Apr 2021


  • Analysts' career concerns
  • Cost of bank loans
  • Firm risk
  • Natural experiment

ASJC Scopus subject areas

  • Business and International Management
  • Finance
  • Economics and Econometrics
  • Strategy and Management


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