Supply uncertainty of the bond investor base and the leverage of the firm

• 成果类型: Article
• 署名作者: Massa, Massimo; Yasuda, Ayako; Zhang, Lei
• 署名单位: INSEAD Business School; University of California System; University of California Davis; Nanyang Technological University
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2013.04.011
• 发表日期: 2013
• 页码: 185-214
• 关键词: institutional investors; Corporate bonds; Bond capital supply uncertainty; capital structure; Investor base

摘要

We examine the effect of the bond capital supply uncertainty of institutional investors (e.g., mutual bond funds and insurance companies) on the leverage of the firm using a novel data set. Our main finding is that the supply uncertainty of the firm's bond investor base - measured as (i) the average portfolio turnover, or (ii) the average flow volatility of investors holding the firm's bonds, or (iii) the prevalence of mutual funds among the firm's bondholders as opposed to insurance companies - has a negative and significant effect on the leverage of the firm. The supply uncertainty of the firm's bond investor base also has a negative and significant effect on the firm's probability of issuing bonds, and a positive and significant effect on the firm's probability of issuing equity and borrowing from banks. We take a multi-pronged approach to address potential endogeneity issues, including use of geography-based instruments and firm fixed effects, subsample analyses, and a placebo test. Our results highlight the fragility of access to the bond market for companies that depend on mutual funds with high turnover/ flow volatility as primary bond investors. (c) 2013 Elsevier B.V. All rights reserved.