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The Informational Efficiency of the Corporate Bond Market: An Intraday Analysis

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Author Info
Edith S. Hotchkiss
Tavy Ronen
Abstract

Using a unique dataset based on daily and hourly high-yield bond transaction prices, we find the informational efficiency of corporate bond prices is similar to that of the underlying stocks. We find that stocks do not lead bonds in reflecting firm-specific information. We further examine price behavior around earnings news and find that information is quickly incorporated into both bond and stock prices, even at short return horizons. Finally, we find that measures of market quality are no poorer for the bonds in our sample than for the underlying stocks. Copyright 2002, Oxford University Press.

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Publisher Info
Article provided by Oxford University Press for Society for Financial Studies in its journal The Review of Financial Studies.

Volume (Year): 15 (2002)
Issue (Month): 5 ()
Pages: 1325-1354
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Handle: RePEc:oup:rfinst:v:15:y:2002:i:5:p:1325-1354

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  1. Oxelheim, Lars & Rafferty, Michael, 2004. "On the Static Efficiency of Secondary Bond Markets," Working Paper Series 623, Research Institute of Industrial Economics. [Downloadable!]
    Other versions:
  2. Biais, Bruno & Declerck, Fany, 2007. "Liquidity, Competition & Price Discovery in the European Corporate Bond Market," IDEI Working Papers 475, Institut d'Économie Industrielle (IDEI), Toulouse. [Downloadable!]
  3. Acharya, Viral V & Johnson, Tim, 2005. "Insider Trading in Credit Derivatives," CEPR Discussion Papers 5180, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  4. Lars Norden & Martin Weber, 2004. "The comovement of credit default swap, bond and stock markets: an empirical analysis," CFS Working Paper Series 2004/20, Center for Financial Studies. [Downloadable!]
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This page was last updated on 2009-12-25.


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