93 NTU Management Review Vol. 31 No. 2 Aug. 2021 Hypothesis 1: If the company invests more organization capital, the bank will provide lower bank loan spreads. Lev et al. (2009) find that companies with higher managerial capabilities will try to use corporate resources more efficiently by investing more organization capital, thereby improving the company’s output and performance. To test the relationships among managerial ability, organization capital and bank loan spreads, we construct hypothesis 2 as follows. Hypothesis 2: Companies with higher managerial abilities will significantly reduce bank loan spreads when their investments in organization capital increase. 3. Research Design 3.1 Sample Resource This paper utilizes the data of US-listed companies from 1985 to 2016 and explores how organization capital affects the lending variables of bank spreads and noninterest spreads. We obtain the variables of bank lending characteristics from the Dealscan database. And following Demerjian, Lev, and McVay (2012), we apply the data envelopment analysis method to measure the ability of managers. Regarding the measurement of organization capital, past studies mostly use Selling, General, and Administrative (SG&A) to quantify organization capital (Lev and Radhakrishnan, 2005; Lev et al., 2009). Traditionally, SG&A expenses are defined as all commercial expenses during the operation of a company to maintain business benefits. These expenses do not include those directly related to product production. A large part of SG&A costs includes information systems, construction and staff training, which is in line with the uniqueness of organization capital and the characteristics of a company’s key talent. More recently, Eisfeldt and Papanikolaou (2013) go further and consider the impact of inflation on SG&A costs and thus estimate organization capital by considering the accumulation of SG&A costs in the consumer price index. In this paper, we choose to measure the organization capital by applying the method from Eisfeldt and Papanikolaou (2013). The calculation method is as follows:
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