Complementarity in Bond Design

50 Pages Posted: 10 May 2018 Last revised: 15 Apr 2019

See all articles by Robert L. Kieschnick

Robert L. Kieschnick

University of Texas at Dallas

Malcolm Wardlaw

University of Georgia

Date Written: March 21, 2019


This study examines the joint choice of bond features that corporations make in defining their bonds. Using data on new corporate bond issues from 1990 through 2012, we find that corporate bonds are packages of different provisions and restrictions reflecting complementarities between bond features that change with issuer characteristics. Broadly, we find evidence that asymmetries of information between issuer and investors, agency conflicts between stockholders and bondholders, credit risk, the nature of the firm’s growth prospects, and bond market conditions all play a role in the use or non-use of different corporate bond features.

Keywords: bonds, bond design, covenants

JEL Classification: G12, G19, G32, G39

Suggested Citation

Kieschnick, Robert L. and Wardlaw, Malcolm, Complementarity in Bond Design (March 21, 2019). Available at SSRN: or

Robert L. Kieschnick

University of Texas at Dallas ( email )

800 W. Campbell Rd, SM31
Richardson, TX 75080
United States
972-883-6273 (Phone)


Malcolm Wardlaw (Contact Author)

University of Georgia ( email )

Athens, GA 30602-6254
United States

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