Journal article
Information asymmetry and bank regulation: Can the spread of debt contracts be explained by recovery rates?
Abstract
We investigate whether the spread of corporate debt contacts can be explained by their ultimate recovery rates. Using the actual realized recovery rates of defaulted debt instruments issued in the US from 1962 to 2007, we find that recovery rate is reflected in the spread at issuance, and that this relationship has become more significant since commercial banks were allowed to underwrite corporate securities. Our further investigation indicates …
Authors
Liu W; Miu P; Chang Y; Ozdemir B
Journal
Journal of Financial Intermediation, Vol. 21, No. 1, pp. 123–150
Publisher
Elsevier
Publication Date
January 2012
DOI
10.1016/j.jfi.2011.07.001
ISSN
1042-9573