TY - JOUR

T1 - Do Bondholder Relations Efforts Pay Off for German Firms?

T2 - An empirical approach

AU - Janner, Steve

PY - 2016/1

Y1 - 2016/1

N2 - This study investigates the link between corporate disclosure and cost of debt on the German corporate bond market. With a large number of medium-sized bond issuers emerging over the last few years, transparency considerations have become increasingly important. Until now, there has been mainly anecdotal evidence among German bond issuers on whether an increase in disclosure is actually perceived by market participants and, consequently, reflected in lower yield spreads. In contrast to previous studies in this field, I use a very specific bondholder relations measure in addition to a conventional disclosure index. This enables me to examine the relationship between informational efforts directed at the bond market and disclosure that is primarily targeted at shareholders, as espects their influence on bond values. Using an exhaustive list of firm- and bond-related control variables, the multivariate findings confirm a strong negative relationship between disclosure and cost of debt, nearly irrespective of which ranking variable is used. Applying various alternative estimations, I find these results to be robust to potential endogeneity biases.

AB - This study investigates the link between corporate disclosure and cost of debt on the German corporate bond market. With a large number of medium-sized bond issuers emerging over the last few years, transparency considerations have become increasingly important. Until now, there has been mainly anecdotal evidence among German bond issuers on whether an increase in disclosure is actually perceived by market participants and, consequently, reflected in lower yield spreads. In contrast to previous studies in this field, I use a very specific bondholder relations measure in addition to a conventional disclosure index. This enables me to examine the relationship between informational efforts directed at the bond market and disclosure that is primarily targeted at shareholders, as espects their influence on bond values. Using an exhaustive list of firm- and bond-related control variables, the multivariate findings confirm a strong negative relationship between disclosure and cost of debt, nearly irrespective of which ranking variable is used. Applying various alternative estimations, I find these results to be robust to potential endogeneity biases.

KW - Management studies

UR - http://www.scopus.com/inward/record.url?scp=85075243602&partnerID=8YFLogxK

U2 - 10.3790/ccm.49.1.127

DO - 10.3790/ccm.49.1.127

M3 - Journal articles

VL - 49

SP - 127

EP - 153

JO - Kredit und Kapital

JF - Kredit und Kapital

SN - 0023-4591

IS - 1

ER -