Does Informed Trading Affect Bondholders’ Wealth?

This study investigates the relationship between SEC EDGAR Schedule 13D filing events and corporate bond yield spreads. We employ two risk adjusted methods of calculating bond abnormal returns which summarize by Bessembinder et al.(2009). We select a control sample from Moody’s Peer Group to compare with 13D sample. We employ generalized sign test introduced by Cowan(1992) to avoid stringent assumption about return distributions under parametric tests, The empirical results of this study show that significant negative abnormal bond returns were discovered during 13D event periods.