Peer Firms’ Leverage Affects Corporate Bond Yield Spreads
Date Issued
2015
Date
2015
Author(s)
Lu, Yu-Ching
Abstract
This study investigates the relationship between peer firms’ leverage and corporate bond yield spreads. We employ the average of the peer firms’ stock return shocks as a proxy of change of the peer firms’ capital structures. This approach is developed in Leary and Roberts (2014). The empirical results of this study show that the change of peer firms’ capital structure does affect a firm’s bond yield spread. Moreover, we find that firms with smaller market cap are sensitive to the peer firms’ stock return shock. We also explore that this peer effect is much stronger during economic troughs.
Subjects
Capital structure
Leverage
Interaction with peer firms
Yield spread
Type
thesis
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ntu-104-R02723006-1.pdf
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