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We investigate how financial contracting interacts with lending-channel effects by tracing the anatomy of a credit supply shock using micro-level data from a multinational bank. Borrowers with stronger lending relationships, higher nonlending revenues, and those that pledge collateral, especially outside assets and real estate, experience less credit rationing. Consistent with a tightening of financing constraints post shock, borrower composition shifts toward larger and less risky firms, and loans exhibit higher collateralization rates. Our analysis highlights the value of relationships and suggests that relationship banking is a channel through which borrowers can mitigate lending-channel effects.
Between 2009 and 2014, 75% of seasoned equity offerings (SEOs) were announced and issued overnight, compared to 27% between 2000 and 2008. Overnight issuers obtain a higher SEO offer price because they experience more favorable pre-offer returns. Consistent with these favorable returns being due to the avoidance of pre-issue selling pressure, non-overnight issuers experience a 2.5% pre-issue stock-price decline that reverses within 7 days. This post-issue reversal is increasing in SEO offer size and bigger following large pre-issue price declines. In contrast, returns following overnight offerings are less positive and unrelated to SEO offer size or pre-issue returns.
After assuming sole ownership of the Ford Motor Company in 1919, Henry Ford transformed his business into a mission-driven organization that prioritized improvements in production and engineering over investment returns. At the same time, the company programmatically rejected bureaucratic management in favor of informal procedures and ingrained collective protocols, both in administration and on the shop floor. This article references Max Weber's view of “charismatic” authority to explain the company’s organizational structure, its culture, its ambivalence toward Henry Ford’s worst tendencies and prejudices, and its resilience during the decline of his leadership in the 1930s and 1940s.