Equity short selling and the cost of debt
| Autor: | Ali Nejadmaleyeri, Bilal Erturk |
|---|---|
| Jazyk: | English<br />Spanish; Castilian |
| Rok vydání: | 2020 |
| Předmět: | |
| Zdroj: | Multidisciplinary Business Review, Vol 13, Iss 2 (2020) |
| Druh dokumentu: | article |
| ISSN: | 07183992 0718-400X 0718-3992 |
| DOI: | 10.35692/07183992.13.2.5 |
| Popis: | Empirical evidence suggests that short sales have pertinent information about firm fundamentals. If so, then information from short selling in liquid equity markets can be informative for infrequently traded corporate bonds. The adverse information conveyed by short interest should mean higher cost of debt. Using a large sample of corporate bonds, we examine whether lagged equity short interest affects credit spreads. Highly shorted firms do experience wider credit spreads in the subsequent months. Moreover, the increase in short interest leads to higher credit spreads. Short interest thus seems to contain adverse information about firm fundamentals that can prove useful to bond investors. |
| Databáze: | Directory of Open Access Journals |
| Externí odkaz: |
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