PRESS-NEWS.org - Press Release Distribution
PRESS RELEASES DISTRIBUTION

For better loan terms, find a partner

Companies in strategic alliances get better access to financing and more desirable terms

2024-06-25
(Press-News.org) Shoppers browsing through blouses and blenders at Target know they can also quaff a cappuccino at one of more than 1,700 Starbucks cafeshoused within Targets. The strategic alliance benefits both corporations by helping them reach new markets, boost their brands, and add incremental sales.

Collaborative partnerships such as this have grown at a pace of 3,600 per year, according to the SDC Platinum database. That’s partly because companies in alliances can gain access to new technologies and customers while keeping their autonomy.

New research from Texas McCombs highlights another advantage of alliances: They also make borrowing money easier.

Urooj Khan, associate professor of accounting, finds that companies entering strategic alliances can get both better access to financing and better terms through the financial networks of their partners. Banks that have already lent to one partner offer lower interest rates to a company entering the alliance.

The reason is that having a relationship with one partner helps them get insight into the other company, beyond what’s found in financial statements and alliance agreements, such as the strength of its commitment to the alliance and its ability to execute the alliance effectively. Such inputs are critical for assessing the credit risk of a borrower.

“It’s really hard to see whether a company will live up to its strategic alliance commitments, even if they put it on paper,” says Khan. “But these alliances have significant consequences for the companies’ financial futures, cash flows, and revenues.”

Knowing that an alliance can improve a company’s bottom line, banks can lend with less uncertainty, he adds. They can spend less on screening and monitoring, making it possible to extend a lower-interest loan to the new partner.

With Vincent Yongzhao Lin of Washington University in St. Louis, Zhiming Ma of Peking University, and Derrald Stice of Hong Kong University, Khan analyzed 5,343 U.S. bank loans issued to 1,254 borrowers in strategic alliances from 1991 to 2016.

The average company got loans from banks that had existing relationships with an alliance partner, as well as other loans from banks that did not. That allowed the researchers to compare lending outcomes. They found that in the four years after an alliance commenced:

Borrowers in alliances were 6% more likely to get financing from alliance-related banks than from non-alliance-related banks. Interest rates on loans from alliance-related banks were 0.13 percentage points lower, on average, than loans from banks with no alliance connection. These cost savings represented a 7% decrease in the average cost of borrowing. Alliance-related banks gave even more favorable rates when:

An alliance was economically important, as measured by its closeness to the company’s core businesses, similar markets for the partners’ products, or the equity markets’ reactions upon the alliance’s announcement. The borrower’s transparency and accounting quality were low, making inside information from its partner even more critical to assessing its risk. The findings have implications for banks and for companies considering entering a strategic alliance, Khan says.

Banks can look at new alliance partners of their existing clients as avenues for potential business growth.

For companies — especially those that anticipate needing a loan — the findings can help them decide whether to pursue an alliance in the first place.

“Companies typically consider access to new markets and technology or cost savings as the main benefits of forging strategic alliances,” he says. “Our research shows that partners can also benefit from each other’s financial networks through alliances.

“Thus, the quality and extensiveness of a firm’s banking relationships is an important factor in choosing an alliance partner.”

“Strategic Alliances and Lending Relationships” is published online in The Accounting Review.

 

END


ELSE PRESS RELEASES FROM THIS DATE:

How uncertainty builds anxiety

2024-06-25
Alfred Hitchcock observed that “There is no terror in the bang, only in the anticipation of it.” A common way to build suspense in a movie scene is for the audience to know something bad is going to happen, but not when it is going to happen. But how does uncertainty work to ratchet up our anxiety? In a recent paper in the journal Computational Psychiatry, researchers at the University of California, Davis, Department of Psychology take a deeper look into what builds fear. Not knowing when something will happen can cause anxiety, but until ...

Adolescents today are more satisfied with being single

2024-06-25
Young people aged 14 to 20 years are nowadays more satisfied with being single than their counterparts ten years ago. This is the conclusion of a study undertaken by the Institute of Psychology at Johannes Gutenberg University Mainz (JGU). "It seems that today's adolescents are less inclined to pursue a romantic relationship. This could well be the reason for the increased singlehood satisfaction," said psychologist Dr. Tita Gonzalez Avilés, lead author of the recent study. Growing numbers of people are living as ...

Researchers discover new flat electronic bands, paving way for advanced quantum materials

Researchers discover new flat electronic bands, paving way for advanced quantum materials
2024-06-25
In a study published in Nature Communications June 19, a team of scientists led by Rice University’s Qimiao Si predicts the existence of flat electronic bands at the Fermi level, a finding that could enable new forms of quantum computing and electronic devices. Quantum materials are governed by the rules of quantum mechanics, where electrons occupy unique energy states. These states form a ladder with the highest rung called the Fermi energy. Electrons, being charged, repel each other and move in correlated ways. ...

Discovery of vast sex differences in cellular activity has major implications for disease treatment

2024-06-25
By Darrin S. Joy  “We discovered a pronounced ‘men are from Mars, women are from Venus’ pattern,” says marine and environmental biologist Suzanne Edmands. She refers not to human psychology, but rather to mitochondria, the cell components responsible for generating energy. Edmands, professor of biological sciences at the USC Dornsife College of Letter, Arts and Sciences, recently published research in the Proceedings of the National Academy of Sciences that reveals vast differences in gene activity within the mitochondria of males compared to females. Although the study looks at tiny marine organisms called copepods, ...

nTIDE June 2024 Deeper Dive: Employment trends for people with disabilities highlight continued gains for those with vision impairments

nTIDE June 2024 Deeper Dive: Employment trends for people with disabilities highlight continued gains for those with vision impairments
2024-06-25
East Hanover, NJ – June 25, 2024 – The employment-to-population ratio for individuals with vision impairments continues to show marked improvement, according to data shared during the according to last Friday’s National Trends in Disability Employment (nTIDE) Deeper Dive Lunch & Learn Webinar. nTIDE is a joint effort by Kessler Foundation and the University of New Hampshire’s Institute on Disability (UNH-IOD). Director of Research Arielle Silverman, PhD, and Research Specialist Sarahelizabeth Baghun, PhD, from the ...

WVU refining at-home sleep apnea detection device to help with more efficient diagnosis, treatment

WVU refining at-home sleep apnea detection device to help with more efficient diagnosis, treatment
2024-06-25
West Virginia University researchers will put a sleep apnea detection device at the fingertips or wrists of patients facilitating early diagnosis and treatment of the disease with support from a National Science Foundation grant. Dr. Sunil Sharma, N. Leroy Lapp Professor and division chief of the Pulmonary, Critical Care and Sleep Medicine Fellowship Program in the WVU School of Medicine, received the award after working with other WVU researchers to develop prototypes and secure a patent. “It’s about taking technology from the lab to the bedside,” Sharma said. ...

UC San Diego receives $5 million to support geriatrics workforce enhancement program

2024-06-25
The University of California San Diego has been selected for the third time to participate in the Geriatrics Workforce Enhancement Program (GWEP). This highly selective program comes with a $5 million grant from the Health Resources and Services Administration (HRSA). These funds will be used over the next five years to support the San Diego Imperial Geriatric Education Center (SDIGEC), which provides geriatric educational programming to health workers and other care providers across both San Diego and ...

Got prunes? Prunes may preserve bone density and strength in older women

2024-06-25
UNIVERSITY PARK, Pa. — Dairy isn’t the only food that’s good for bone health. Prunes may also protect bone structure and strength in postmenopausal women, according to a new study led by Penn State researchers. The findings, published in Osteoporosis International, suggest that daily prune consumption slows the progression of age-related bone loss and reduces the risk of fracture. “This is the first randomized controlled trial to look at three-dimensional bone outcomes with respect to bone structure, geometry and estimated strength,” said Mary Jane ...

Associations of childhood, adolescence, and midlife cognitive function with DNA methylation age acceleration in midlife

Associations of childhood, adolescence, and midlife cognitive function with DNA methylation age acceleration in midlife
2024-06-25
“[...] our study brings attention to the potential influence of adolescent crystalized intelligence on age-related DNAm at older age.” BUFFALO, NY- June 25, 2024 – A new research paper was published in Aging (listed by MEDLINE/PubMed as "Aging (Albany NY)" and "Aging-US" by Web of Science) Volume 16, Issue 11, entitled, “Associations of childhood, adolescence, and midlife cognitive function with DNA methylation age acceleration in midlife.” Prior studies showed increased age acceleration (AgeAccel) is associated with worse cognitive function among ...

Think you might have COVID? Wait two days to test

Think you might have COVID? Wait two days to test
2024-06-25
Peek in medicine cabinets across the U.S. and you’ll find stacks of leftover COVID-19 tests. When symptoms arise, so do questions: When should I test? How accurate is it really? And what should I do if I test positive? In a paper published June 14 in the journal Science Advances, CU Boulder researchers unveil a new mathematical model to quickly answer such questions, not only for COVID but also for emerging rapid tests for respiratory syncytial virus (RSV), the flu and other infectious diseases. One key takeaway: Advice can differ ...

LAST 30 PRESS RELEASES:

Tree rings reveal increasing rainfall seasonality in the Amazon

Scientists find unexpected deep roots in plants

Researchers unveil the immune cells responsible for systemic sclerosis’s deadliest complications

New blood test holds potential to reduce liver transplant failures

Science clears the way to treating the trickiest bladder cancers

Drug treatment alters performance in a neural microphysiological system of information processing

Wildfires could be harming our oceans and disrupting their carbon storage

Tarantulas bend rules to keep running after losing two legs

How chemical bonds are formed: physicists at TU Graz observe energy flow in real time

Fatty liver – but not liver damage – common in type 2 diabetes

Hydrogen sourcing could make or break Romania’s green steel ambitions, study finds

Disconnected from math, students call for real-world relevance in RAND’s first-ever youth survey

Three Hebrew University researchers win prestigious ERC Advanced Grants for pioneering work

Illuminated changes: Enhancing D-lactic acid output with UV irradiation

From food to textile – agricultural waste can become the clothes of the future

Claire Foldi advances eating disorder neuroscience research

Yes, in my back yard: people who live near large-scale solar projects are happy to have more built nearby

Easily attach nanoparticles like toy blocks for industrial use!

LEGO improves maths and spatial ability in the classroom

Despite overall progress, low birthweight rates still high in certain Indian states

Train teachers on how to get parents involved in children’s learning, say researchers

Evolution made us cheats, now free-riders run the world and we need to change, new book warns

Report outlines blueprint to grow Australia’s bioeconomy

Medicaid cuts in the "One Big Beautiful Bill Act" could undermine the coverage, financial well-being, medical care, and health of low-income Americans, and lead to more than 16,500 medically-preventab

Groundbreaking TACIT algorithm offers new promise in diagnosing, treating cancer

Long-term study reveals Native seeding controls annual, but not perennial, invasive plants in sand grassland restoration

Printed energy storage charges into the future with MXene inks

Exposure to low levels of arsenic in public drinking water linked to lower birthweight, preterm birth, study finds

AMS Science Preview: Gun violence & weather; NOAA flights improve hurricane forecasts; atmospheric rivers and radio waves

New strategy for the treatment of severe childhood cancer

[Press-News.org] For better loan terms, find a partner
Companies in strategic alliances get better access to financing and more desirable terms