- مبلغ: ۸۶,۰۰۰ تومان
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In comparison to bank financing, public debt market may allow firms to more readily match maturity and risk structures between their assets and liabilities. We test whether new issuers on the European corporate bond markets experience a change in their interest rate sensitivity upon their bond issuance. We find that stock returns have become significantly less sensitive to interest rate fluctuations for firms that enter the publicly traded bond market. Our findings support the notion that firms manage their interest rate risk with new debt issues.
We study the effects of the rapid growth in corporate bond financing, which has been attributed to the introduction of the euro (Rajan and Zingales, 2003). Korkeamaki (2011) reports that the move to euro has reduced corporate exposure to interest rate fluctuation. This reduction is consistent with the suggestion that deeper markets in home-currency corporate debt allow firms to better manage their interest rate exposures. This notion receives further support as many of the countries that exhibit the shift in interest rate sensitivity are countries where the local markets were relatively segmented prior to the euro (Korkeamaki, 2011). At the firm level, we find that besides affecting firms’ capital structure (Faulkender and Petersen, 2006), the source of debt also seems to affect their interest rate risk management, as firms entering the public debt markets experience a significant shift in their interest rate exposure. As such, our results suggest that euro is having an intended consequence onfirm’sfinancing, asmarket depth and the consequently increased market completeness were among the proposed benefits of the common currency in the pre-euro era. Studying the time period that straddles the regime shift provides us with a unique opportunity to observe whether opening up of the corporate bond markets indeed has an effect on firms’ interest rate sensitivity. As we not only find thatinterest rate sensitivity decreases upon a bond IPO, but also that firms from more interest rate sensitive industries appear to be more drawn to the bond market, our evidence lines up well with the suggestion thatinterest rate risk management plays a role in the firm’s decision to issue publicly traded debt. Itis interesting to note that our results differ from prior evidence, in particular from the U.S. Itis possible thatthe effects of bond issuance on interest rate sensitivity are more concealed in countries where markets aremore established and differences betweendebt sources perhaps less marked.