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Cultural Distance And Bond Pricing: Evidence In The Yankee And Rule 144a Bond Markets

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  • Hui Zhu
  • Kelly Cai

Abstract

type="main" xml:lang="en"> In this article we examine the impact of cultural distance on the pricing of corporate bonds issued in the United States. We find that greater cultural differences between U.S. investors and foreign issuers increase the cost of debt. We also find that the cost of Rule 144a offers is less sensitive to cultural distance and creditor protection effects because of the different market structure and investor bases in the Yankee and Rule144a bond markets. Our results suggest that cultural differences influence bond pricing through an information asymmetry channel.

Suggested Citation

  • Hui Zhu & Kelly Cai, 2014. "Cultural Distance And Bond Pricing: Evidence In The Yankee And Rule 144a Bond Markets," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 37(3), pages 357-384, September.
    • Handle: RePEc:bla:jfnres:v:37:y:2014:i:3:p:357-384
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    Cited by:

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    8. Cai, Kelly Nianyun & Zhu, Hui, 2016. "The market reaction to Yankee and Rule 144A bond offerings," Journal of Multinational Financial Management, Elsevier, vol. 34(C), pages 1-17.
    9. Song Han & Alan G. Huang & Madhu Kalimipalli & Ke Wang, 2018. "Information and Liquidity of OTC Securities : Evidence from Public Registration of Rule 144A Bonds," Finance and Economics Discussion Series 2018-061, Board of Governors of the Federal Reserve System (U.S.).
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