Corporate bonds or bank loans? The choice of funding sources and information disclosure of Polish listed companies

Anna Białek-Jaworska; Tomasz Krawczyk

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Corporate bonds or bank loans? The choice of funding sources and information disclosure of Polish listed companies

Anna Białek-Jaworska

Tomasz Krawczyk

| 08 juil. 2020

Central European Economic Journal

Édition 6 (2019): Edition 53 (January 2019)

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Publié en ligne: 08 juil. 2020

Pages: 262 - 285

DOI: https://doi.org/10.2478/ceej-2019-0017

Mots clés
corporate bonds, bank loans, disclosure, cash flow variability, investment risk

© 2019 Anna Białek-Jaworska et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Definition of dependent variables (definitions of all variables available on request)

Variable	Definition
y1L	Substitutability of bonds and bank loans—binary variable takes the value 1 if a firm issued bonds in the year t (and did not borrow from bank) and 0, if the firm borrowed in a year t (but did not issue bonds)
y2L	Complementariness of bonds and bank loans—binary variable takes the value 1 if a firm issued bonds in the year t, while contracting a bank loan at the same time; and 0, if the firm contracted a loan in the same year or issued bonds (but did not issue those kinds of debt together in the same year)
y3L	Bond issue—binary variable takes the value 1 if a firm issued bonds in the year t and 0—otherwise
y4L	Bank loans—binary variable takes the value 1 if a company borrowed a bank loan in the year covered by the analysis; and 0, if the company did not borrow a bank loan that year
ysub	Weak form of substitutability of bonds and bank loans—binary variable takes the value 1 if a firm issued bonds in the year t; and 0, if the firm borrowed only a bank loan in that year t
y1p	The size of the bond issue/total assets
y2p	Inflow of bank loan/total assets

Results of panel analysis of determinants of corporate bonds issue

y1p	FE	RE	AMGLS	FE	RE	AMGLS
y4l	−0.0816^*** (0.0119)	−0.0709^*** (0.0103)	−0.0422^*** (0.0038)	−0.0819^*** (0.0119)	−0.0714^*** (0.0103)	−0.0425^*** (0.0039)
Risk	−0.0094 (0.0822)	0.0894 (0.0742)	0.0608^* (0.0347)	−0.0250 (0.0823)	0.0806 (0.0741)	0.0592^* (0.0346)
Leverage	0.0368^*** (0.0142)	0.0277^** (0.0113)	0.0114^** (0.0056)	0.0357^** (0.0143)	0.0256^** (0.0115)	0.0102^* (0.0055)
dum_zscore	0.0209^## (0.0139)	0.0266^** (0.0118)	0.0063^* (0.0035)	0.0219^## (0.0139)	0.0260^** (0.0118)	0.0060^* (0.0035)
Debt	0.0165^*** (0.0014)	0.0129^*** (0.0012)	0.0070^*** (0.0005)	0.0167^*** (0.0014)	0.0130^*** (0.0016)	0.0070^*** (0.0005)
Growth	−0.0015^** (0.0007)	0.0004 (0.0007)	0.0009^# (0.0007)	−0.0013^** (0.0007)	0.0004 (0.0007)	0.0009^# (0.0007)
Tangibility	0.0913^** (0.0418)	−0.0057 (0.0195)	−0.0050 (0.0045)	0.0836^** (0.0418)	−0.0076 (0.0196)	−0.0055 (0.0047)
subs_inv	0.0037^*** (0.0013)	0.0007 (0.0010)	−0.0002 (0.0003)	0.0037^*** (0.0013)	0.0007 (0.0010)	−0.0001 (0.0003)
Rating_2	0.0135^*** (0.0050)	0.0030 (0.0044)	−0.0002 (0.0016)
Rating_3				−0.0081^** (0.0034)	−0.0030 (0.0027)	−0.0006 (0.0008)
public_debt_t1	−0.0137^* (0.0082)	0.0024 (0.0075)	0.0125^*** (0.0030)	−0.0133^## (0.0082)	0.0019 (0.0075)	0.0120^*** (0.0030)
fin_pressures	0.00001 (0.0003)	−0.0002 (0.0002)	−0.0002^*** (0.00003)	−0.00002 (0.0003)	−0.0003 (0.0002)	−0.0002^*** (0.00004)
_cons	−0.0511^*** (0.0135)	−0.0117^# (0.0105)	−0.0026^# (0.0023)	−0.0310^** (0.0148)	−0.0041 (0.0121)	−0.0011 (0.0035)
Number of observations	761	761	761	761	761	761
Number of groups	208	208	208	208	208	208
R² within group	0.2604	0.2164		0.2584	0.2182
R² between groups	0.0251	0.1069		0.0307	0.1072
R² overall	0.0908	0.1500		0.0963	0.1507
corr(u_i, Xb)		−0.4480			−0.4384
F(11,542) test		17.35^***			17.17^***
F(207,542) test that all u_i=0		2.84^***			2.82^***
Wald test		151.47^***	369.16^***		152.42^***	361.24^***
Sargan–Hansen test of over-identifying restrictions		127.022^***			124.156^***
Hausmann test		109.98^***			107.86^***
Breusch–Pagan Lagrangian multiplier test for random effects		54.87^***			55.84^***
Wooldridge test for autocorrelation in panel data		3.728			3.756
Wooldridge test for autocorrelation in panel data		0.0550			0.0541
Modified Wald test for groupwise heteroscedasticity in fixed-effect regression model	−208^***			−208^***

Results of panel analysis of determinants of bank loans borrowings

y2p	FE	RE	AMGLS	FE	RE	AMGLS	FE	RE	AMGLS
y1l	−0.1449^*** (0.0239)	−0.1196^*** (0.0206)	−0.0757^*** (0.0053)	−0.1416^*** (0.0240)	−0.1172^*** (0.0206)	−0.0750^*** (0.0052)	−0.1422^*** (0.0238)	−0.1181^*** (0.0206)	−0.0779^*** (0.0052)
Risk	0.0303 (0.1552)	−0.0347 (0.1295)	0.0190 (0.0340)	0.0313 (0.1555)	−0.0146 (0.1295)	0.0233 (0.0328)	−0.0042 (0.1555)	−0.0535 (0.1309)	0.0057 (0.0341)
Leverage	−0.0712^** (0.0282)	−0.0017 (0.0186)	0.0048 (0.0076)	−0.0743^*** (0.0283)	−0.0031 (0.0192)	−0.0002 (0.0084)	−0.0775^*** (0.0281)	−0.0113 (0.0191)	−0.0019 (0.0074)
market_to_ book	1.04e-06 (2.18e-06)	1.33e-06 (1.41e-06)	6.23e-07 (5.36e-07)	6.42e-07 (2.22e-06)	1.34e-06 (1.43e-06)	7.08e-07^# (5.26e-07)	1.82e-07 (2.19e-06)	9.06e-07 (1.43e-06)	2.57e-07 (5.17e-07)
roa	−0.2597^** (0.1205)	0.0618 (0.0998)	−0.0538^** (0.0269)	−0.2364^** (0.1212)	0.0729 (0.1017)	−0.0533^* (0.0279)	−0.2332^* (0.1198)	0.0990 (0.1005)	−0.0238 (0.0256)
dum_zscore	0.0154 (0.0294)	−0.0146 (0.0218)	−0.0026 (0.0053)	0.0174 (0.0296)	−0.0136 (0.0219)	−0.0033 (0.0052)	0.0239 (0.0295)	−0.0138 (0.0218)	−0.0059^# (0.0051)
Debt	0.0148^*** (0.0020)	0.0123^*** (0.0015)	0.0090^*** (0.0004)	0.0145^*** (0.0020)	0.0120^*** (0.0015)	0.0088^*** (0.0004)	0.0148^*** (0.0020)	0.0122^*** (0.0015)	0.0091^*** (0.0004)
Growth	0.0017^# (0.0013)	0.0013 (0.0012)	0.0014^*** (0.0003)	0.0017^# (0.0013)	0.0013 (0.0012)	0.0013^*** (0.0003)	0.0021^## (0.0013)	0.0014 (0.0012)	0.0015^*** (0.0003)
Tangibility	−0.1092 (0.0792)	−0.0104 (0.0317)	0.0129^## (0.0084)	−0.1066 (0.0793)	−0.0144 (0.0321)	0.0132^## (0.0083)	−0.1246^## (0.0793)	−0.0213 (0.0319)	0.0200^*** (0.0080)
oper_risk	1.17e-07 (1.26e-07)	1.76e-09 (3.63e-08)	6.63e-09 (1.65e-08)	1.11e-07 (1.26e-07)	9.22e-10 (3.65e-08)	6.34e-09 (1.70e-08)	1.13e-07 (1.26e-07)	5.15e-09 (3.65e-08)	8.36e-09 (1.55e-08)
long_debt	0.0279 (0.0265)	0.0086 (0.0193)	−0.0006 (0.0047)	0.0338 (0.0271)	0.0105 (0.0196)	0.0007 (0.0047)	0.0417^## (0.0268)	0.0153 (0.0195)	0.0035 (0.0046)
subs_inv	−0.0042^* (0.0024)	−0.0021^# (0.0016)	−0.0012^** (0.0005)	−0.0040^* (0.0024)	−0.0019^# (0.0017)	−0.0013^** (0.0005)	−0.0041^* (0.0024)	−0.0019^# (0.0016)	−0.0012^*** (0.0005)
Rollover_debt	−1.65e-09 (2.51e-09)	−1.41e-09 (2.33e-09)	−1.13e-09^** (5.41e-10)	−1.68e-09 (2.52e-09)	−1.36e-09 (2.34e-09)	−1.13e-09^** (5.56e-10)	−1.71e-09 (2.51e-09)	−1.38e-09 (2.33e-09)	−1.2e-09^** (5.94e-10)
Age	−0.0083^## (0.0053)	−0.0064^*** (0.0017)	−0.0030^*** (0.0005)	−0.0082^## (0.0053)	−0.0063^*** (0.0017)	−0.0031^*** (0.0005)	−0.0098^* (0.0053)	−0.0065^*** (0.0017)	−0.0036^*** (0.0005)
public debt_t1	−0.0151 (0.0157)	−0.0076 (0.0131)	−0.0042 (0.0036)	−0.0180 (0.0157)	−0.0093 (0.0132)	−0.0044 (0.0035)	−0.0168 (0.0155)	−0.0111 (0.0131)	−0.0091^*** (0.0034)
rating_2	−0.0116^# (0.0096)	−0.0126^* (0.0076)	−0.0070^*** (0.0022)
rating_3				−0.0044 (0.0067)	0.0004 (0.0048)	0.0007 (0.0013)
rating_1							0.0558^*** (0.0240)	0.0294^* (0.0169)	0.0142^*** (0.0043)
_cons	0.0917^* (0.0535)	0.0563^** (0.0271)	0.0243^*** (0.0071)	0.0931^* (0.0550)	0.0503^* (0.0286)	0.0220^*** (0.0074)	0.0861^* (0.0529)	0.0478^* (0.0270)	0.0245^*** (0.0069)
No of observations of groups	761	761	752	761	761	752	761	761	752
	208	208	199	208	208	199	208	208	199
R² within group	0.1573	0.1279		0.1556	0.1266		0.1634	0.1329
R² between groups	0.0302	0.1222		0.0293	0.1165		0.0298	0.1156
R² overall	0.0778	0.1248		0.0765	0.1210		0.0777	0.1237
corr(u_i, Xb)	−0.3248			−0.3204			−0.3511
F(16,537)	6.26^***			6.19^***			6.56^***
F-test that all u_i=0
F(207, 537)	1.81^***			1.82^***			1.85^***
Wald test chi-squared		106.02^***	631.16^***		102.91^***	629.24^***		106.37^***	808.66^***
Sargan–Hansen test of over-identifying restrictions
chi-squared		43.653^***			43.550^***			45.921^***
Hausman test of over-identifying restrictions
chi-squared (13)		41.77^***			41.59^***			43.76^***
Breusch–Pagan Lagrangian multiplier test for random effects
chibar²(01)		28.32^***			28.89^***			29.69^***
Wooldridge test for autocorrelation in panel data
F(1,187)		−208^***			−208^***			−208^***
Modified Wald test for groupwise heteroscedasticity in fixed-effect regression model
chi-squared (211)		8.755^***			8.610^***			8.505^***

Corporate bonds used by companies listed on WSE and outflows in the period 1999–2014

Numbers of companies	1999	2000	2001	2002	2003	2004	2005	2006	2007	2008	2009	2010	2011	2012	2013	2014
Bonds issue	24	17	14	18	17	18	18	21	35	37	46	59	84	91	97	75
Bank loans without issue bonds	23	38	46	37	42	40	43	57	49	63	69	72	79	88	77	76
Liquidity support by bond issue	6	8	4	7	5	4	6	8	14	11	19	25	39	36	40	38
Financial investments	20	15	14	16	12	13	10	16	25	28	30	44	48	52	56	41
Tangible investments	22	16	13	16	16	15	17	20	30	33	39	48	59	68	63	54

Logistics analysis of the choice between corporate bonds and bank loans

Variable	Model 1 y1L		Model 2 y2L		Model 3 y3L		Model 4 ysub		Model 5 y4L Bank loans

	Substitutability		Complementariness		Bond issue		Weak substitutability

	Coeff	dy/dx	Coeff	dy/dx	Coeff	dy/dx	Coeff	dy/dx	Coeff	dy/dx
acc_policy	−9.068^*** (3.57)	−1.889^* (1.11)	2.799^** (1.35)	0.606^* (0.33)
disc_income	10.812^** (5.05)	2.252^* (1.29)			−4.351^** (1.85)	−0.657^** (0.28)	−4.448^*** (1.77)	−1.106^*** (0.44)
disc_balance	−7.960^* (4.59)	−1.658^# (1.20)			4.452^** (1.83)	0.673^** (0.27)	5.596^*** (1.85)	1.392^*** (0.46)
Risk	−67.295^** (31.71)	−14.018^# (10.15)	−6.727 (5.39)	−1.456 (1.22)	−13.154^* (7.90)	−1.987^* (1.21)	−10.947^## (7.15)	−2.722^## (1.77)
Bankruptcy	−0.927^** (0.48)	−0.193^*^ (0.07)			−0.027^** (0.01)	−0.004^** (0.002)	−0.104^** (0.05)	−0.026^** (0.01)	0.042^** (0.02)	0.009^** (0.004)
dum bankrupt	9.047^*** (3.00)	0.366 (0.30)	−5.381^# (3.94)	−0.387^** (0.16)
Debt	0.542^** (0.23)	0.113^# (0.09)	1.367^*** (0.22)	0.296^*** (0.08)	0.574^*** (0.09)	0.087^*** (0.01)	0.473^*** (0.10)	0.117^*** (0.02)	0.538^*** (0.06)	0.111^*** (0.02)
Growth	0.068 (0.36)	0.014 (0.07)	0.093 (0.12)	0.020 (0.03)	0.011 (0.06)	0.002 (0.01)	0.022 (0.06)	0.005 (0.01)	0.092 (0.18)	0.019 (0.04)
Tangibility	−2.819^* (1.74)	−0.587^# (0.45)	−0.080 (0.84)	−0.017 (0.18)	−0.969^# (0.77)	−0.146^# (0.11)	−0.872 (0.76)	−0.217 (0.19)	0.805 (0.95)	0.166 (0.19)
oper_risk	4.76e−06^*** (1.86e−06)	9.91e−07^* (0.00)							−2.03e-06^*** (5.69e-07)	−4.20e-07^*** (0.00)
subs_inv	−0.343^*** (0.13)	−0.071^* (0.04)
Maintain liquidity	−0.091^*** (0.04)	−0.019^## (0.01)	0.070^** (0.04)	0.015^* (0.01)	0.035^** (0.016)	0.005^** (0.002)
Rating	1.960^** (0.83)	0.408^## (0.27)	−0.575^** (0.28)	−0.124^* (0.07)			−0.242 (0.24)	−0.060 (0.06)	−0.249 (0.23)	−0.051 (0.05)
Size			−1.26^*** (0.23)	−0.273^*** (0.08)					−0.218^** (0.10)	−0.045^** (0.02)
fin_pressures					0.003^* (0.002)	0.0004^* (0.0002)	0.004^# (0.003)	0.001^# (0.001)
riskdisclosure	1.039 (1.01)	0.216 (0.23)			−0.682^* (0.37)	−0.103^* (0.05)	−0.498^# (0.37)	−0.124^# (0.09)	1.072^*** (0.33)	0.221^*** (0.07)
public_debt_t1			1.185^*** (0.35)	0.259^*** (0.09)	1.348^*** (0.32)	0.224^*** (0.06)	1.578^*** (0.31)	0.375^*** (0.07)
Auditor	−1.591^* (0.97)	−0.328^# (0.25)			−1.400^*** (0.39)	−0.203^*** (0.05)	−1.041^*** (0.39)	−0.252^*** (0.09)
freefloat	−4.413^** (2.23)	−0.919^# (0.65)			−1.167^# (0.84)	−0.176^# (0.13)
tax_shield	0.558^# (0.40)	0.116^## (0.07)			0.020 (0.02)	0.003 (0.002)
Age					−0.062^## (0.04)	−0.009^## (0.01)	−0.063^* (0.04)	−0.016^* (0.01)
rollover_debt	2.023^** (0.93)	0.421^* (0.22)
Liquidity					−0.019 (0.02)	−0.003 (0.002)
real_estate					−0.336^* (0.18)	−0.051^* (0.03)
tax_saving			−0.233^# (0.16)	−0.050 (0.05)
long_debt			−0.760^# (0.58)	−0.164 (0.13)
_cons	−4.804^## (3.36)		1.021 (1.62)		−4.372^*** (1.34)		−4.728^*** (1.52)		−1.236 (1.12)
Pr(y) (predict)	0.704		0.317		0.185		0.463		0.708
Correct classif	88.50%		82.46%		81.49%		76.21%		88.08%
LR	87.3^***		139.6^***		188.96^***		112.1^***		205.9^***
Adjusted count R²:	0.667		0.478		0.519		0.226		0.634
Pearson	chi-squared (94)	67.0	chi-squared (255)	255.3	chi-squared (317)	261.6	chi-squared (255)	247.5	chi-squared (335)	335.5
Prob.		0.984		0.482		0.990		0.620		0.483
LR chi-squared (2)	87.57^***		139.58^***		188.96^***		112.42^***		207.95^***
Log likelihood	−29.03		−101.25		−128.79		−129.93		−113.09
Pseudo R²	0.601		0.408		0.423		0.302		0.479
_hat	1.046^*** (0.24)		0.999^*** (0.15)		1.001^*** (0.12)		1.012^*** (0.13)		1.035^*** (0.13)
hatsq	0.034 (0.05)		−0.001 (0.06)		0.002 (0.05)		0.039 (0.07)		−0.077 (0.05)
cons	−0.063 (0.37)		0.001 (0.20)		−0.003 (0.18)		−0.056 (0.18)		0.234 (0.26)

Results of panel analysis of determinants of bonds issues in the period 1999–2014

Variable	RE random effects	Prais––Winsten regression
y2p	−0.0276^* (0.0150)	−0.0378 (0.0316)
Size	−0.0077^*** (0.0022)	−0.0070^*** (0.0026)
Leverage	0.0250^*** (0.0088)	0.0308^*** (0.0088)
market_to_book	8.00e-07^## (5.51e-07)	7.48e-07 ^*** (2.10e-07)
dum_zscore	0.0148^** (0.0067)	0.0216^** (0.0101)
Debt	0.0085^*** (0.0007)	0.0093^*** (0.0004)
Tangibility	−0.0582^*** (0.0159)	−0.0574^*** (0.0151)
Liquidity	0.0001 (0.0001)	0.0001^*** (0.00003)
tang_investment	0.0016^# (0.0012)	0.0017^# (0.0013)
subs_inv	0.0029^*** (0.0007)	0.0024^*** (0.0009)
Maintainliquidity	0.0001^** (0.00004)	0.0001^# (0.0001)
tax_shield	0.0012^*** (0.0004)
Age	−0.0019^** (0.0008)	−0.0020^* (0.0012)
public_debt_t1	0.0319^*** (0.0062)	0.0219^# (0.0157)
Growth		−3.91e-06^*** (1.38e-06)
_cons	0.0641^*** (0.0204)	0.0534^*** (0.0146)
Number of observations	2154
Number of groups	223
Obs. per group: minimum	3
Average	9.6592
Maximum	16
R²	0.1250
Wald chi-squared (14)	297.01^***	4712.70^***
Modified Wald test for groupwise heteroscedasticity in fixed-effect regression model	chi-squared (223) = 7.5e+05^***
Wooldridge test for autocorrelation	F(1, 222) = 6.437^**
Breusch and Pagan Lagrangian multiplier test for random effects	chibar2(01) = 499.87^***

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Corporate bonds or bank loans? The choice of funding sources and information disclosure of Polish listed companies

Publié en ligne: 08 juil. 2020

Pages: 262 - 285

DOI: https://doi.org/10.2478/ceej-2019-0017

Mots cléscorporate bonds, bank loans, disclosure, cash flow variability, investment risk

© 2019 Anna Białek-Jaworska et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Definition of dependent variables (definitions of all variables available on request)

Results of panel analysis of determinants of corporate bonds issue

Results of panel analysis of determinants of bank loans borrowings

Corporate bonds used by companies listed on WSE and outflows in the period 1999–2014

Logistics analysis of the choice between corporate bonds and bank loans

Results of panel analysis of determinants of bonds issues in the period 1999–2014

Mots clés
corporate bonds, bank loans, disclosure, cash flow variability, investment risk