Work

Societal secrecy and corporate debt financing choice

Year: 2025

Type: article

Abstract: We investigate the impact of societal secrecy on corporate debt financing decisions. Based a sample of 30,680 firms across 34 countries, we find robust evidence that societal secrecy is positively associated with bank debt financing and negatively associated with public debt financing. This finding is robust to a wide variety of sensitivity tests and to addressing endogeneity concerns. Cross-sectional analyses show that strong shareholder rights protection and the degree of internationalization moderate the relation between societal secrecy and debt choice. Additional analyses reveal that societal secrecy influences the choice of debt financing through three channels: information asymmetry, proprietary cost information, and information production cost. Our study sheds light on societal secrecy as a potential explanation for the variations in public debt market development across countries.

Source: Journal of International Financial Markets Institutions and Money

DOI: 10.1016/j.intfin.2025.102179

Authors: Cephas Simon Peter Dak-Adzaklo, Solomon Wise Dodzidenu Adza, Joseph Maxwell Asamoah, Pascar Tagwan Tah

Institutions: University of Sussex, Hong Kong Polytechnic University, Lingnan University, City University of Hong Kong

Language: English

Topic: Corporate Finance and Governance

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

SDG: Peace, justice, and strong institutions

Open Access status: hybrid

Estimated APC paid: $2,930