Download This PaperOptions Trading and Corporate Debt Structure
Journal of Accounting and Public Policy, volume 49, 2025[10.1016/j.jaccpubpol.2024.107274]
57 Pages Posted: 10 Feb 2020 Last revised: 9 Apr 2026
Date Written: December 06, 2024
Abstract
Options trading activity can affect firm debt structure decisions by stimulating informed trading that improves the informational environment in which firms raise debt capital. We find supporting evidence, at both the extensive and intensive margin, that firms with actively traded options are able to shift from bank to public debt financing. We provide corroborating evidence that the shift from bank financing reflects reduced demand for the special role that banks play in ex ante information collection and ex post monitoring for firms with greater information asymmetry. Three quasi-natural experiments and instrumental variable analysis support a causal interpretation of our findings.
Keywords: Options trading, debt structure, new debt choice, information asymmetry
JEL Classification: G32, G21, M41, D82
Suggested Citation: Suggested Citation