Information Flow Risk, Supply Chain Characteristics and Corporate Bond Yield Spreads

50 Pages Posted: 17 Mar 2010 Last revised: 26 Aug 2013

See all articles by Tsung-Kang Chen

Tsung-Kang Chen

National Chiao Tung University

Hsien-Hsing Liao

National Taiwan University

Hui-Ju Kuo

National Taiwan University

Yu-Ling Hsieh

National Taiwan University

Date Written: January 15, 2010

Abstract

This study explores the relations between information flow risk, supply chain characteristics, and corporate bond yield spreads by employing American bond market data. This study finds that suppliers’ information flow risk plays an important role in explaining bond yield spreads when controlling for credit ratings and other well known variables. The empirical results also show that bond yield spreads positively relate to the degree of concentration of supplier/ customer industries (concentration effects) while they negatively relate to the R&D intensities of its suppliers (R&D effects). Specifically, information asymmetry (proxy of information flow risk) of suppliers significantly alleviates their concentration effects on bond yield spreads, whereas it less likely mitigates the R&D effects.

Keywords: Information flow risk, Bond yield spreads, Supply chain, Customers, Suppliers

JEL Classification: D82, G12, M11

Suggested Citation

Chen, Tsung-Kang and Liao, Hsien-Hsing and Kuo, Hui-Ju and Hsieh, Yu-Ling, Information Flow Risk, Supply Chain Characteristics and Corporate Bond Yield Spreads (January 15, 2010). Available at SSRN: https://ssrn.com/abstract=1572202 or http://dx.doi.org/10.2139/ssrn.1572202

Tsung-Kang Chen (Contact Author)

National Chiao Tung University ( email )

No. 1001, Dasyue Rd., East Dist.,
Hsinchu City, 300
Taiwan

Hsien-Hsing Liao

National Taiwan University ( email )

1 Sec. 4, Roosevelt Road
Taipei, 106
Taiwan

Hui-Ju Kuo

National Taiwan University ( email )

1 Sec. 4, Roosevelt Road
Taipei 106, 106
Taiwan

Yu-Ling Hsieh

National Taiwan University ( email )

1 Sec. 4, Roosevelt Road
Taipei 106, 106
Taiwan

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