Abstract
Building on rational choice institutionalism theory and Williamson’s (J Econ Lit 38(3): 595–613, 2000) four-level social analysis framework, we investigate the influence of the informal institution of social trust on debt contract design in an international setting. Using a sample of non-U.S. firms that issue bonds in the U.S. debt market, we find that Yankee bond creditors impose fewer covenants on bond issuers domiciled in countries with a high degree of social trust. We further show that the inverse relationship between debt covenants and the informal institution of social trust is more pronounced for firms from countries with weak formal institutions, as well as for firms with poor corporate governance and greater information opacity. These findings are robust to endogeneity tests, within-country analysis, various empirical models and measures of trust, and alternative hypotheses. We also show that, while a lower level of informal social trust is associated with higher borrowing costs, this relationship weakens when formal covenants are added to the debt contract (i.e., a substitution effect). Our paper contributes to the international business literature by providing new insights into the role of informal institutions (social trust) in cross-border debt contracting.
Resume
En s’appuyant sur la théorie institutionnelle du choix rationnel et le cadre d’analyse sociale à quatre niveaux de Williamson (2000), nous étudions l’influence de l’institution informelle de la confiance sociale sur la conception des contrats d’emprunt dans un contexte international. En utilisant un échantillon d’entreprises non américaines qui émettent des obligations sur le marché américain de la dette, nous constatons que les créanciers d’obligations yankees imposent moins de clauses aux émetteurs d’obligations domiciliés dans des pays où le degré de confiance sociale est élevé. Nous montrons en outre que la relation inverse entre les clauses de la dette et l’institution informelle de la confiance sociale est plus prononcée pour les entreprises de pays dont les institutions formelles sont faibles, ainsi que pour les firmes dont la gouvernance d’entreprise est médiocre et l’opacité de l’information plus grande. Ces résultats sont robustes aux tests d’endogénéité, à l’analyse au sein des pays, à divers modèles empiriques et mesures de la confiance, ainsi qu’à des hypothèses alternatives. Nous montrons également que si un niveau plus faible de confiance sociale informelle est associé à des coûts d’emprunt plus élevés, cette relation s’affaiblit lorsque des clauses formelles sont ajoutées au contrat de dette (c’est-à-dire un effet de substitution). Notre article contribue à la littérature en international business en apportant de nouvelles perspectives sur le rôle des institutions informelles (confiance sociale) dans la conclusion de contrats de dette transfrontaliers.
Resumen
Con base en la teoría de institucionalismo de elección racional y el marco de los cuatro niveles de análisis social de Williamson (2000), investigamos la influencia de las instituciones informales en la confianza pública en el diseño de contratos de deuda en un escenario internacional. Usando una muestra de empresas no estadounidenses que emitieron bonos en el mercado de deuda de los Estados Unidos, encontramos que los acreedores de bonos yankee imponen menos cláusulas en los emisores de bonos domiciliados en países con un mayor nivel de confianza social. Además, mostramos que la relación inversa entre las cláusulas de deuda y las instituciones informales de confianza social es más pronunciada para empresas de países con instituciones formales débiles, así como para las empresas con un gobierno corporativo débil y mayor opacidad de información. Estos hallazgos son robustos a las pruebas de endogeneidad, el análisis dentro del país, varios modelos empíricos y medidas de confianza, y las hipótesis alternativas. También mostramos que mientras más bajo sea nivel de confianza social informal se asocia con mayores costos de endeudamiento, esta relación se debilita cuando las cláusulas formales son añadidas al contrato de deuda (es decir, el efecto de substitución). Nuestro manuscrito contribuye a la literatura de negocios internacionales al dar nuevas comprensiones sobre el rol de las instituciones informales (confianza social) en contrataciones de deuda transfronteriza.
Resumo
Com base na teoria do institucionalismo da escolha racional e no modelo de análise social de quatro níveis de Williamson (2000), investigamos a influência da instituição informal de confiança social no design de contratos de dívida em um cenário internacional. Usando uma amostra de empresas não americanas que emitem títulos no mercado de dívida dos EUA, descobrimos que os credores de títulos Yankee impõem menos cláusulas aos emissores de títulos domiciliados em países com um alto grau de confiança social. Mostramos ainda que a relação inversa entre cláusulas de dívida e a instituição informal de confiança social é mais pronunciada para empresas de países com instituições formais fracas, bem como para empresas com má governança corporativa e maior opacidade da informação. Essas descobertas são robustas para testes de endogeneidade, análises dentro do país, vários modelos empíricos e medidas de confiança e hipóteses alternativas. Também mostramos que, embora um nível mais baixo de confiança social informal esteja associado a mais altos custos de empréstimos, essa relação se enfraquece quando cláusulas formais são adicionadas ao contrato de dívida (ou seja, um efeito de substituição). Nosso artigo contribui para a literatura sobre negócios internacionais ao fornecer novos insights sobre o papel de instituições informais (confiança social) na contratação de dívida transfronteiriça.
摘要
基于理性选择制度主义理论和威廉姆森(2000)的四级社会分析框架, 我们研究了国际环境下的非正式社会信任制度对债务合同设计的影响。使用在美国债务市场发行债券的非美国公司的样本, 我们发现杨基债券债权人对居住在社会信任度较高国家的债券发行人强加的契约较少。我们进一步表明, 债务契约与非正式社会信任制度之间的反向关系对正规制度薄弱国家的公司以及对公司治理差且信息不透明的公司更为明显。这些发现对于内生检验、国内分析、信任度的各种实证模型和量表, 以及其它假设都是可靠的。我们还表明, 虽然较低的非正式社会信任度与较高的借贷成本有关, 但是当正式契约加入债务合同(即替代效应)时, 这种关系减弱(即替代效应)。我们的文章通过对非正式机构(社会信任)在跨境债务承包中的作用提出新见解, 为国际商务文献做出了贡献。
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Acknowledgements
The authors thank three anonymous reviewers, Aya Chacar (Guest Editor), Luis Dau (Guest Editor), JT Li (Guest Editor), Marjorie Lyles (Guest Editor), Narjess Boubakri, Nancy Buchan, Ruiyuan Chen, Chuck Kwok, Kevin J. Maloney (Bryant research seminar discussant), Sattar Mansi, Gerald McDermott, Peter J. Nigro (Bryant research seminar discussant), Blake Rayfield (FMA discussant), Andy Spicer, He Wang, Xiaolan Zheng, Charles E. Stevens, and participants at the 2018 Academy of International Business annual meeting, the 2019 Financial Management Association annual meeting, and the 2018 Bryant University research seminar, for their helpful comments and suggestions. Sadok El Ghoul acknowledges financial support from Canada’s Social Sciences and Humanities Research Council [Grant Number 435-2020-1156].
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Brockman, P., El Ghoul, S., Guedhami, O. et al. Does social trust affect international contracting? Evidence from foreign bond covenants. J Int Bus Stud 53, 1011–1044 (2022). https://doi.org/10.1057/s41267-020-00348-4
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DOI: https://doi.org/10.1057/s41267-020-00348-4