Impact of Readability on Corporate Bond Market

33 Pages Posted: 3 Jul 2019

Date Written: July 1, 2019

Abstract

This paper investigates the impact of annual report readability on the corporate bond market. My findings indicate that in the US corporate bond market, firms with less readable annual reports tend to have higher credit spreads, higher credit spread volatilities, higher transaction costs, higher transaction costs volatility, smaller trade size, higher number of trades and higher number of trades volatility. This paper also provides the first answers to the question as to whether annual report readability matters to international market participants in the corporate bond market. My findings show evidence that in the EUR corporate bond market, firms with more readable annual reports are associated with lower credit spreads.

Keywords: Readability, Annual Report, Textual Analysis, Corporate Bond, Credit Spread, Spread Volatility, Transactions Costs, Trading Volume

JEL Classification: G12, G14, G30, M41, M48

Suggested Citation

Fang-Klingler, Jieyan, Impact of Readability on Corporate Bond Market (July 1, 2019). Available at SSRN: https://ssrn.com/abstract=3413509 or http://dx.doi.org/10.2139/ssrn.3413509

Jieyan Fang-Klingler (Contact Author)

Quoniam Asset Management GmbH ( email )

Frankfurt
Germany

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