Information Flow Risk, Supply Chain Characteristics and Corporate Bond Yield Spreads
50 Pages Posted: 17 Mar 2010 Last revised: 26 Aug 2013
Date Written: January 15, 2010
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: Suggested Citation