• Mon - Fri: 10 am - 5 pm
  • Mississauga, Ontario, Canada

Global Financial Researches

Researchers are contributing to the Financial World every day.
Follow the most classic and pragmatic Researches of Financial Research Analysts.

Powered By Academy of IFRA®


Bond liquidity and investment

This paper examines the effects of bond liquidity on firms’ investments. We postulate that bond liquidity increases firms’ investment opportunities by reducing the cost of capital and improving access to financing. Using the variation in liquidity generated by several – both positive and negative – exogenous shocks, we find that firms respond to positive (negative) shocks by expanding (contracting) capital expenditures and acquisition activity. Further, by enhancing access to funding, bond liquidity facilitates acquisition financing and reduces the likelihood of investment delays. We also find a positive impact of bond liquidity on market valuations and profitability, suggesting that these investments are value-increasing.

Author - Laura Casares Field, Anahit Mkrtchyan, Yuan Wang
Journal - Journal of Banking and Finance

Source - https://www.sciencedirect.com/science/article/abs/pii/S037842662200231X?via%3Dihub