Ride on Past? Evidence from Corporate Bond Offering Price Persistence
Advances in Pacific Basin Business, Economics and Finance
ISBN: 978-1-80043-871-2, eISBN: 978-1-80043-870-5
Publication date: 22 July 2021
Abstract
This chapter presents evidence of persistence in pricing new corporate bond issues. Both transition matrix and regression analyses show that cross-sectional differences in the yields of initial public bond offerings across issuers persist over time, and the persistence effect is stronger for firms with no rating changes, less frequent bond issuance, and higher information asymmetry. Our findings support the hypothesis of the “ride on past” behavior and confirm the value of information production accumulated from the past bond issuances for the pricing of newly issued bonds.
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Acknowledgements
Acknowledgment
Xiaoguang Yang acknowledges financial support from the research grant of the National Science Foundation of China (NSFC) (No. 70933003) and the 973 Program (2010CB731405).
Citation
Gao, H., Jiang, R., Wu, C. and Yang, X. (2021), "Ride on Past? Evidence from Corporate Bond Offering Price Persistence", Lee, C.-F. and Yu, M.-T. (Ed.) Advances in Pacific Basin Business, Economics and Finance (Advances in Pacific Basin Business, Economics and Finance, Vol. 9), Emerald Publishing Limited, Leeds, pp. 107-135. https://doi.org/10.1108/S2514-465020210000009004
Publisher
:Emerald Publishing Limited
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