Building upon recent research suggesting that debt markets rather than equity markets shape financial reporting, this study examines the relationship between conditional conservatism (used as a proxy for information risk) and the underpricing of newly issued corporate bonds. There are two...

This paper shows that bond market liquidity plays an important role in determining corporate debt contracts. We find that bonds with better expected market liquidity are issued with fewer restrictive covenants, longer maturities, and lower offering yield spreads. These results are robust to a...

This paper studies how stock market sentiment impacts corporate bond valuations. Using bond transactions from the Trading and Compliance Engine (TRACE), we find that sentiment is negatively related to bond yield spreads, with the impact being stronger after the onset of the recent credit crisis....

This paper employs data on corporate bond mutual fund flows to investigate bond investments under low interest rates. In response to the Fed’s lower interest rate policy, we find that investment-grade bond funds receive inflows, while high-yield bond funds are not responsive. This result can...