Abstract
We examine how heterogeneity in institutional equity ownership affects bondholders. Firms with larger short-term (long-term) institutional ownership are associated with higher (lower) future bond yield spreads. The adverse effect of short-term ownership on bond pricing is driven by issuing firms that have larger financial distress risk and larger equity volatility. The favorable effect of long-term ownership appears to be more systematic. Further, this bond pricing effect is stronger in cases where shareholder rights are relatively weak. Finally, the effect of short (long) horizons is driven by concentrated (diffused) institutional holdings.
| Original language | English |
|---|---|
| Pages (from-to) | 54-74 |
| Number of pages | 21 |
| Journal | Journal of Corporate Finance |
| Volume | 36 |
| DOIs | |
| State | Published - Feb 1 2016 |
| Externally published | Yes |
Bibliographical note
Publisher Copyright:© 2015 Elsevier B.V.
ASJC Scopus Subject Areas
- Business and International Management
- Finance
- Economics and Econometrics
- Strategy and Management
Keywords
- Agency cost of debt
- G12
- G32
- G34
- Information
- Institutional investors
- Investment horizon
Disciplines
- Business
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