Corporate Bond Issuers

What are the mechanisms behind corporate bond finance? Whereas a lot of corporate finance research is focused on stocks, corporate bond finance is relatively unknown territory. In this thesis, we present four articles in which we study the costs and effects of financing with bonds. We follow corporate bond issuers from market entry, through subsequent issuers to the stage where they repurchase their bonds. In addition to the firms themselves, important players are bondholders, shareholders, management and intermediaries (banks). In the first paper, bond market entry is studied and related to agency costs of equity. Central is the question whether shareholders benefit from the presence of bonds in the firms' capital structure. The second paper investigates the costs of issuing bonds (in terms of yields to maturity and fees paid to underwriters) in a bank-oriented system faced with deregulation. Are bond issues by firms with strong bank ties affected differently by regulation than those by independent firms? Whether frequent bond issuers enjoy lower yields is the subject of the third paper. Do firms benefit from enhanced reputations and better market literacy when doing repeat issues? Finally, the fourth article studies firms that repurchase their bonds, with a special focus on possible wealth transfers between bondholders and shareholders. 

Full text dissertation (available after PhD defense)

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Olga Novikova

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