Affiliation:
1. Cox School of Business, Southern Methodist University
2. Fox School of Business, Temple University
Abstract
Abstract
We document that nearly half of U.S. public firms were eligible for the Paycheck Protection Program (PPP) in 2020, with 41.8% of those eligible choosing to borrow. Consistent with the program’s objectives, borrowers tended to be smaller with less cash, higher leverage, and fewer investment opportunities. In addition, firm values declined upon PPP loan announcement and borrowers grew slower in 2020 relative to nonborrowers. We document that 13.5% of PPP borrowers, in particular those facing more public scrutiny, returned their loans after public backlash. Overall, concerns of reputational harm appeared to dissuade eligible public firms from availing emergency government funding. (JEL E61, E65, G38, H81)
Publisher
Oxford University Press (OUP)
Subject
Economics and Econometrics,Finance,Business and International Management
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