Lifting the Veil: The Price Formation of Corporate Bond Offerings

49 Pages Posted: 12 Mar 2020 Last revised: 20 Jul 2021

See all articles by Liying Wang

Liying Wang

University of Nebraska at Lincoln

Date Written: November 24, 2020


Using newly available data on initial prices, this study is the first to analyze the price updating process associated with corporate bond (CB) offerings. Similar to the case for equity IPOs, the evidence shows that bookbuilding theories help explain the CB offering price. In particular, CB price updates reduce underwriters' pricing errors. The partial adjustment phenomenon exists, and underwriters propose a lower initial price in cases of greater uncertainty. However, the CB price update has a large mean value and is smaller for lower-rated offerings, indicating that part of the CB price update is unrelated to investors' information production.

Keywords: Corporate bond offerings, Bookbuilding, Price update, Underpricing, Partial adjustment

JEL Classification: G12, G24, G32

Suggested Citation

Wang, Liying, Lifting the Veil: The Price Formation of Corporate Bond Offerings (November 24, 2020). Journal of Financial Economics (JFE), Forthcoming, Available at SSRN: or

Liying Wang (Contact Author)

University of Nebraska at Lincoln ( email )

Lincoln, NE 68588
United States

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