Private Firms with Public Debt: Empirical Findings of First Time Bond Issuers

Detta är en D-uppsats från Handelshögskolan i Stockholm/Institutionen för finansiell ekonomi

Sammanfattning: This paper studies inaugural bond issues made by private firms in relation to public equity firms on Western European bond markets. By combining data on security issues and company financial statements, we examine firm and bond characteristics of the respective type of firm. We add to existing research by analyzing how terms change in follow-up issues for private firms that go public with debt in relation to already public counterparts. We find that private first-time issuers are younger, smaller and more asset tangible than industry-matched public issuers. Their inaugural bonds are similar in characterizing features but are more likely to be secured. We find no difference in yield attributable to a firm's private status, controlling for observable characteristics. Additionally, we find that private issuers see no improvement in yield between the first and second issue. Hence, private firms in our sample see no apparent benefit of increased public disclosure, contrary to what is expected from lowered information asymmetry.

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