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(367)
- News (70)
- Research (229)
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- Faculty Publications (87)
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- Forthcoming
- Article
Institutional Corporate Bond Pricing
By: Lorenzo Bretscher, Lukas Schmid, Ishita Sen and Varun Sharma
We propose an equilibrium corporate bond pricing model that accommodates the heterogeneity in institutional investors' preferences and mandates in an empirically tractable way. Our model, estimated on rich holdings data, quantifies investors' preferences and demand... View Details
Keywords: Corporate Bonds; Demand Systems; Insurance Companies; Mutual Funds; Liquidity; Bonds; Price; Investment Funds
Bretscher, Lorenzo, Lukas Schmid, Ishita Sen, and Varun Sharma. "Institutional Corporate Bond Pricing." Review of Financial Studies (forthcoming).
- Working Paper
Measuring the Perceived Liquidity of the Corporate Bond Market
By: Sergey Chernenko and Adi Sunderam
We propose a novel measure of bond market liquidity that does not depend on transaction data: the strength of the cross-sectional relationship between mutual fund cash holdings and fund flow volatility. Our measure captures how liquid funds perceive their portfolio... View Details
Chernenko, Sergey, and Adi Sunderam. "Measuring the Perceived Liquidity of the Corporate Bond Market." NBER Working Paper Series, No. 27092, May 2020.
- March 2016 (Revised May 2021)
- Case
Michael Milken: The Junk Bond King
By: Tom Nicholas and Matthew G. Preble
Michael Milken, an investment banker who dominated the junk bond market in the 1980s, was sentenced to jail in 1990 after pleading guilty to a number of securities and tax-related felonies. In the preceding decade, Milken had helped usher in a new wave of leveraged buy... View Details
Keywords: Junk Bonds; High-yield Bonds; Financial Innovation; Shareholder Value; Bonds; Capital; Capital Structure; Cost of Capital; Crime and Corruption; Entrepreneurship; Ethics; Finance; Investment Banking; Leveraged Buyouts; Mergers and Acquisitions; Ownership; Private Equity; Restructuring; United States
Nicholas, Tom, and Matthew G. Preble. "Michael Milken: The Junk Bond King." Harvard Business School Case 816-050, March 2016. (Revised May 2021.)
- June 2013
- Article
Issuer Quality and Corporate Bond Returns
By: Robin Greenwood and Samuel G. Hanson
We show that the credit quality of corporate debt issuers deteriorates during credit booms, and that this deterioration forecasts low excess returns to corporate bondholders. The key insight is that changes in the pricing of credit risk disproportionately affect the... View Details
Greenwood, Robin, and Samuel G. Hanson. "Issuer Quality and Corporate Bond Returns." Review of Financial Studies 26, no. 6 (June 2013): 1483–1525. (Internet Appendix Here.)
- 2012
- Working Paper
Issuer Quality and Corporate Bond Returns
By: Robin Greenwood and Samuel G. Hanson
We show that the credit quality of corporate debt issuers deteriorates during credit booms, and that this deterioration forecasts low excess returns to corporate bondholders. The key insight is that changes in the pricing of credit risk disproportionately affect the... View Details
Keywords: Price; Credit; Risk and Uncertainty; Investment Return; Forecasting and Prediction; Bonds; Market Design; Cost of Capital; Mathematical Methods; System Shocks
Greenwood, Robin, and Samuel G. Hanson. "Issuer Quality and Corporate Bond Returns." Harvard Business School Working Paper, No. 11-065, January 2011. (Revised September 2012, Internet Appendix Here.)
- 2021
- Working Paper
The Green Bonding Hypothesis: How Do Green Bonds Enhance the Credibility of Environmental Commitments?
By: Shirley Lu
This paper proposes and provides evidence on a green bonding hypothesis, where green bonds act as a commitment device that subjects firms to institutions holding them accountable to their environmental promises. I find that green-bond issuers face higher climate change... View Details
Keywords: Bonding Hypothesis; Sustainable Finance; Climate Change; Corporate Social Responsibility and Impact; Environmental Sustainability; Bonds; Corporate Accountability
Lu, Shirley. "The Green Bonding Hypothesis: How Do Green Bonds Enhance the Credibility of Environmental Commitments?" SSRN Working Paper Series, No. 3898909, December 2021.
- 2020
- Working Paper
Internal Models, Make Believe Prices, and Bond Market Cornering
By: Ishita Sen and Varun Sharma
Exploiting position-level heterogeneity in regulatory incentives to misreport and novel data on regulators, we document that U.S. life insurers inflate the values of corporate bonds using internal models. We estimate an additional $9-$18 billion decline in regulatory... View Details
Keywords: Life Insurers; Capital Regulation; Internal Models; Corporate Bonds; Regulatory Supervision; Concentrated Ownership; Bonds; Capital; Governing Rules, Regulations, and Reforms; Insurance; Investment Portfolio
Sen, Ishita, and Varun Sharma. "Internal Models, Make Believe Prices, and Bond Market Cornering." Working Paper, June 2020.
- 24 Feb 2011
- Working Paper Summaries
Issuer Quality and Corporate Bond Returns
Keywords: by Robin Greenwood & Samuel G. Hanson
- February 2005
- Article
Can Foreign Firms Bond Themselves Effectively by Renting U.S. Securities Laws?
By: Jordan I. Siegel
The study tests the functional convergence hypothesis, which states that foreign firms can leapfrog their countries' weak legal institutions by listing equities in New York and agreeing to follow U.S. securities law. Evidence shows that the SEC and minority... View Details
Keywords: Corporate Governance; Cross-listing; Reputation; Bonding; Business Ventures; Laws and Statutes; Financial Instruments; United States; Mexico
Siegel, Jordan I. "Can Foreign Firms Bond Themselves Effectively by Renting U.S. Securities Laws?" Journal of Financial Economics 75, no. 2 (February 2005): 319–359. (The study tests the functional convergence hypothesis, which states that foreign firms can
leapfrog their countries' weak legal institutions by listing equities in New York and agreeing to follow U.S. securities law. Evidence shows that the SEC and minority shareholders have not effectively enforced the law against cross-listed foreign firms. Detailed evidence from Mexico further shows that while some insiders exploited this weak legal enforcement with impunity, others that issued a cross-listing and passed through an economic downturn with a clean reputation went on to receive privileged long-term access to outside finance. As compared with legal bonding, reputational bonding better explains the success of cross-listings.)
- 29 Jun 2020
- Working Paper Summaries
Measuring the Perceived Liquidity of the Corporate Bond Market
- 2022
- Article
The Pricing and Ownership of U.S. Green Bonds
By: Malcolm Baker, Daniel Bergstresser, George Serafeim and Jeffrey Wurgler
We study green bonds, which are bonds whose proceeds are used for environmentally sensitive purposes. After an overview of the U.S. corporate and municipal green bonds markets, we study pricing and ownership patterns using a simple framework that incorporates assets... View Details
Keywords: Green Bond; Pricing; Climate Finance; ESG; SRI; Sustainable; Municipal; Bonds; Environmental Sustainability; Financial Markets; Price; Ownership; United States
Baker, Malcolm, Daniel Bergstresser, George Serafeim, and Jeffrey Wurgler. "The Pricing and Ownership of U.S. Green Bonds." Annual Review of Financial Economics 14 (2022): 415–437.
- March 1980 (Revised October 1980)
- Background Note
Note on the Corporate Bond Markets
Goldsberry, John P., III. "Note on the Corporate Bond Markets." Harvard Business School Background Note 280-086, March 1980. (Revised October 1980.)
- Research Summary
What Makes the Bonding Stick? A Natural Experiment Involving the U.S. Supreme Court and Cross-Listed Firms
On March 29, 2010, the U.S. Supreme Court signaled its intention to geographically limit the reach of the U.S.securities antifraud regime and thus differentially exclude U.S.-listed foreign firms from the ambit of formal U.S.antifraud enforcement. We exploit this... View Details
- 2018
- Working Paper
Corporate Bond Liquidity: A Revealed Preference Approach
By: Sergey Chernenko and Adi Sunderam
Chernenko, Sergey, and Adi Sunderam. "Corporate Bond Liquidity: A Revealed Preference Approach." Working Paper, March 2018.
- January 2023
- Case
The Ford Motor Company Green Bond
By: Vikram S Gandhi and James Barnett
In November 2021, Ford Motor Company offered a $2.5 billion green bond to finance investments in electrification. Issuance of green bonds significantly increased into the 2020s, and to date, the Ford Motor Company green bond was the largest such bond offered by a... View Details
Keywords: Finance; Bonds; Green Technology; Financial Services Industry; Auto Industry; United States
Gandhi, Vikram S., and James Barnett. "The Ford Motor Company Green Bond." Harvard Business School Case 823-069, January 2023.
- 2018
- Working Paper
Corporate Refinancing, Covenants, and the Agency Cost of Debt
By: Daniel Green
How valuable are restrictive debt covenants in reducing the agency costs of debt? I exploit the revealed preference decision to refinance fixed-coupon bonds, which weighs observable interest rate savings against the unobservable costs of a change in restrictive... View Details
Keywords: Covenants; Refinancing; Corporate Bonds; Agency Costs; Debt Policy; Borrowing and Debt; Bonds; Interest Rates
Green, Daniel. "Corporate Refinancing, Covenants, and the Agency Cost of Debt." Working Paper, 2018. (Revise and Resubmit, Journal of Finance.)
- 2020
- Working Paper
Corporate Leadership and Creditor Recovery Rates: Evidence from Executive Gender
By: Clarissa Hauptmann, Syrena Shirley and Anywhere Sikochi
We examine the relationship between the gender of executives and corporate creditor recovery rates. Using 2,288 defaulted debt instruments, we find that female executives are associated with higher creditor recovery rates. Our findings are robust to tests that correct... View Details
Keywords: Executive Gender; Default; Recovery Rates; Debt; Corporate Bonds; Conservatism; Leadership; Gender; Borrowing and Debt; Bonds; Risk Management
Hauptmann, Clarissa, Syrena Shirley, and Anywhere Sikochi. "Corporate Leadership and Creditor Recovery Rates: Evidence from Executive Gender." Harvard Business School Working Paper, No. 20-087, February 2020.
- Research Summary
What Makes the Bonding Stick? A Natural Experiment Testing the Legal Bonding Hypothesis
On March 29, 2010, the U.S. Supreme Court signaled its intention to geographically limit the reach of the U.S. securities antifraud regime and thus differentially exclude U.S.-listed foreign firms from the ambit of formal U.S. antifraud enforcement. We use this legal... View Details
- Research Summary
Characteristics of Corporate Bond Transactions: Evolution Through Time and Across Liquidity (with George Chacko, Marti Subrahmanyam, and Jeffrey Sutthoff)
The US corporate bond market is one of the most opaque, illiquid markets for corporate securities. Large, comprehensive bond databases are scarce, making it difficult to formally study and understand bond trading behavior. In this paper, we use a unique database of... View Details
- February 2023
- Article
Disruption and Credit Markets
By: Bo Becker and Victoria Ivashina
We show that over the past half century innovative disruptions were central to understanding corporate defaults. In a given year, industries experiencing abnormally high VC or IPO activity subsequently see higher default rates, higher segment exits by conglomerates,... View Details
Becker, Bo, and Victoria Ivashina. "Disruption and Credit Markets." Journal of Finance 78, no. 1 (February 2023): 105–139.