IDEAS home Printed from https://ideas.repec.org/p/hal/wpaper/hal-02896691.html
   My bibliography  Save this paper

Online Reputation and Debt Capacity

Author

Listed:
  • François Derrien

    (Rotman School of Management, University of Toronto - University of Toronto, HEC Paris - Ecole des Hautes Etudes Commerciales)

  • Alexandre Garel

    (Audencia Business School)

  • Arthur Petit-Romec

    (UP1 UFR02 - Université Paris 1 Panthéon-Sorbonne - École d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne)

  • Jean-Philippe Weisskopf

Abstract

This paper explores the effects of online customer ratings on debt capacity. Using a large sample of Parisian restaurants, we find a positive and economically significant relation between customer ratings and bank debt. We use the locally exogenous variation in customer ratings resulting from the rounding of scores in regression discontinuity tests to establish causality. Customer ratings affect financial policy through a reduction in cash flow risk and higher resilience to demand shocks. Restaurants with good ratings use their extra debt capacity to invest in tangible assets. Finally, favorable online ratings relax credit constraints mostly for moderately constrained restaurants.

Suggested Citation

  • François Derrien & Alexandre Garel & Arthur Petit-Romec & Jean-Philippe Weisskopf, 2020. "Online Reputation and Debt Capacity," Working Papers hal-02896691, HAL.
    • Handle: RePEc:hal:wpaper:hal-02896691
    DOI: 10.2139/ssrn.3538313
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ke & Ma & Sophie Yanying Sheng & Haitian Xie, 2023. "Employer Reputation and the Labor Market: Evidence from Glassdoor.com and Dice.com," Papers 2305.02587, arXiv.org, revised Sep 2023.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hal:wpaper:hal-02896691. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CCSD (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.