Corporate Bond Flipping

83 Pages Posted: 17 Feb 2022 Last revised: 18 Jan 2024

See all articles by Stanislava (Stas) Nikolova

Stanislava (Stas) Nikolova

University of Nebraska-Lincoln

Liying Wang

University of Nebraska at Lincoln

Date Written: February 2, 2022


In this paper, we provide the first empirical evidence on corporate bond flipping. Analyzing 2002-2018 insurer trades, we estimate that flipping accounts for 30% of trading volume during the first two days of trading. We show that when flipping their allocation in an offering, insurers avoid selling to the underwriters despite underwriters providing better prices. Offerings with worse aftermarket performance are flipped less, but the flipping-to-performance sensitivity is similar when flipping to underwriters or non-underwriters, suggesting that underwriters discourage flipping in both overpriced and underpriced offerings. Insurers flipping to the underwriters receive less profitable allocations in these underwriters' subsequent offerings, and underwriters with relatively more flipping are less likely to be hired for the issuer's subsequent offerings. Our findings suggest that underwriters, in part incentivized by issuers, attempt to limit flipping by using their allocation discretion to penalize it.

Keywords: Corporate bonds, primary market, secondary market, allocations, flipping, underpricing, insurance companies, underwriters, dealers

JEL Classification: G14, G22, G24, G28, G30

Suggested Citation

Nikolova, Stanislava (Stas) and Wang, Liying, Corporate Bond Flipping (February 2, 2022). Available at SSRN: or

Stanislava (Stas) Nikolova

University of Nebraska-Lincoln ( email )

730 N. 14th Street
P.O. Box 880405
Lincoln, NE 68588-0405
United States

Liying Wang (Contact Author)

University of Nebraska at Lincoln ( email )

730 N. 14th Street
Lincoln, NE 68588
United States

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