Welcome to my personal website!

Introduction

Hello! My name is Zirui Song. I am a second-year PhD student at MIT Sloan. Previously I worked at Chicago Booth after graduating from the University of Chicago with degrees in Mathematics, Economics (Honors), and Statistics.

My research interests are Banking, Debt Contracting, and Corporate Finance.

Working Papers

• Tax Shields Under Siege: The Effect of Limiting Interest Deductibility on Commercial Lending Negotiations (SSRN Link)
  with Edward L. Maydew, Matthew A. Phillips
  Abstract: This paper examines how tax policy affects borrower-lender negotiations in syndicated loan markets. Using the Tax Cuts and Jobs Act (TCJA) of 2017 as a natural experiment, we analyze changes in loan terms for firms facing higher after-tax borrowing costs due to limits on interest deductibility. We find that borrowers most likely to face limited interest deductibility negotiate lower interest rates post-TCJA. Importantly, we observe no changes in non-price terms such as covenants, maturities, or collateral requirements, suggesting that lenders share the incidence of tax policy burdens with borrowers rather than offsetting reduced rates through stricter loan terms. The results are concentrated in borrowers that operate in industries that saw increased lender competition after the TCJA. We also find no evidence of changes in the creditworthiness of firms with limited interested deductibility post-TCJA, suggesting that the change in loan spreads is not attributable to changes in borrower fundamentals. Our findings demonstrate lenders’ willingness to share borrowers’ tax burdens as a novel channel by which tax policy affects corporate financing decisions and credit markets.

• Information Covenants of Nonbank Direct Lending (Draft coming soon!)

Other Writing

• Why Stock Buybacks Increase Financial Stability in Banking (ProMarket Link)
  with S.P. Kothari, Hamid Mehran