Legal Environment and Corporate Bonds: The Primal Role of Information

44 Pages Posted: 6 Jan 2019 Last revised: 5 Jul 2019

See all articles by Paul-Olivier Klein

Paul-Olivier Klein

University of Aberdeen Business School; University of Strasbourg

Date Written: April 23, 2019


This paper appraises the relative impact of creditor information and creditor rights on corporate bond issues. I employ a large panel of 3,969 bond issuers from 54 countries, between 2013 and 2017. I constantly find that an increase in creditor information is associated with an increase in the amounts of bonds issued. On the opposite, I document a very limited impact of creditor protection. Considering both simultaneously, only the positive impact of information persists, supporting a primal role of information on bond markets. I show that the positive effect of information originates from both the supply- and demand-side of the bond market, with lower coupon rates, less restrictive covenants, longer maturities and more frequent issues. I further document how creditor information alleviates issues stemming from firm’s opacity and firm’s risk. Results are robust to different specifications and robustness tests.

Keywords: Corporate Bonds, Creditor Information, Creditor Rights, Supply and Demand Side, Firm Opacity, Firm Risk

JEL Classification: G10, G32, K40

Suggested Citation

Klein, Paul-Olivier, Legal Environment and Corporate Bonds: The Primal Role of Information (April 23, 2019). Available at SSRN: or

Paul-Olivier Klein (Contact Author)

University of Aberdeen Business School ( email )

Dunbar Street
Aberdeen, Scotland AB24 3QY
United Kingdom

University of Strasbourg ( email )

61, avenue de la foret noire
Strasbourg, Alsace 3000

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