Lifting the veil: The price formation of corporate bond offerings

• 成果类型: Article
• 署名作者: Wang, Liying
• 署名单位: University of Nebraska System; University of Nebraska Lincoln
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2021.06.037
• 发表日期: 2021
• 页码: 1340-1358
• 关键词: Corporate bond; Bookbuilding; Price update; Underpricing; Partial adjustment phenomenon

摘要

Using newly available data on initial prices, this study is the first to analyze the price updating process associated with corporate bond (CB) offerings. Similar to the case for equity IPOs, the evidence shows bookbuilding theories help explain the CB offering price. In particular, CB price updates reduce underwriters' pricing errors. The partial adjustment phenomenon exists, and underwriters propose a lower initial price in cases of greater uncertainty. However, the CB price update has a large mean value and is smaller for lower rated offerings, indicating part of the CB price update is unrelated to investors' information production. (c) 2021 Elsevier B.V. All rights reserved.