IDEAS home Printed from https://ideas.repec.org/a/eee/finlet/v58y2023ipbs1544612323007766.html
   My bibliography  Save this article

Insider selling and credit spread of corporate bonds1

Author

Listed:
  • Sun, Chenhe
  • Ji, Yinuo
  • Chen, Zhenyun

Abstract

This paper investigates the impact of insider selling on credit spreads in the secondary market of corporate bonds. The data of listed corporate bonds with insider sale events from 2012 to 2021 are selected as the research sample. It is found that the greater the intensity of insider's holdings sale, the greater the credit spreads of corporate bonds in the secondary market; the mechanism test reveals that the more serious the company's unpredicted performance decline, the more pronounced the positive impact of insider's holdings sale on credit spreads; when analysts' attention increases, it correspondingly weakened the positive impact of insider's holdings sale on the credit spreads of corporate bonds.

Suggested Citation

  • Sun, Chenhe & Ji, Yinuo & Chen, Zhenyun, 2023. "Insider selling and credit spread of corporate bonds1," Finance Research Letters, Elsevier, vol. 58(PB).
    • Handle: RePEc:eee:finlet:v:58:y:2023:i:pb:s1544612323007766
    DOI: 10.1016/j.frl.2023.104404
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1544612323007766
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.frl.2023.104404?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Gyimah, Daniel & Siganos, Antonios & Veld, Chris, 2021. "Effects of financial constraints and product market competition on share repurchases," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 74(C).
    2. Berkman, Henk & Koch, Paul & Westerholm, P. Joakim, 2020. "Inside the director network: When directors trade or hold inside, interlock, and unconnected stocks," Journal of Banking & Finance, Elsevier, vol. 118(C).
    3. Xiang, Junyi & Zhu, Ling & Kong, Dongmin, 2023. "Labor cost and corporate tax avoidance," Journal of Economic Behavior & Organization, Elsevier, vol. 205(C), pages 338-358.
    4. Naumer, Hans-Jörg & Yurtoglu, Burcin, 2022. "It is not only what you say, but how you say it: ESG, corporate news, and the impact on CDS spreads," Global Finance Journal, Elsevier, vol. 52(C).
    5. Datta, Sudip & Doan, Trang & Iskandar-Datta, Mai, 2019. "Policy uncertainty and the maturity structure of corporate debt," Journal of Financial Stability, Elsevier, vol. 44(C).
    6. Liu, Shasha & Zhao, Huixian & Kong, Gaowen, 2023. "Enterprise digital transformation, breadth of ownership and stock price volatility," International Review of Financial Analysis, Elsevier, vol. 89(C).
    7. Nozawa, Yoshio & Qiu, Yancheng, 2021. "Corporate bond market reactions to quantitative easing during the COVID-19 pandemic," Journal of Banking & Finance, Elsevier, vol. 133(C).
    8. Salvi, Antonio & Giakoumelou, Anastasia & Bertinetti, Giorgio Stefano, 2021. "CSR in the bond market: Pricing stakeholders and the moderating role of the institutional context," Global Finance Journal, Elsevier, vol. 50(C).
    9. Cioroianu, Iulia & Corbet, Shaen & Larkin, Charles, 2021. "The differential impact of corporate blockchain-development as conditioned by sentiment and financial desperation," Journal of Corporate Finance, Elsevier, vol. 66(C).
    10. Xie, Nan & Xu, Qifa & Jiang, Cuixia & Fu, Hong, 2023. "Social media, investor-company interaction and insider trading profitability: Evidence from China," Research in International Business and Finance, Elsevier, vol. 66(C).
    11. Benmelech, Efraim & Kumar, Nitish & Rajan, Raghuram, 2022. "The secured credit premium and the issuance of secured debt," Journal of Financial Economics, Elsevier, vol. 146(1), pages 143-171.
    12. Allen, Franklin & Qian, Meijun & Xie, Jing, 2022. "Implicit benefits and financing," Journal of Financial Intermediation, Elsevier, vol. 52(C).
    13. Li, Keming, 2020. "Does Information Asymmetry Impede Market Efficiency? Evidence from Analyst Coverage," Journal of Banking & Finance, Elsevier, vol. 118(C).
    14. Azofra, Valentín & Rodríguez-Sanz, Juan Antonio & Velasco, Pilar, 2020. "The role of macroeconomic factors in the capital structure of European firms: How influential is bank debt?," International Review of Economics & Finance, Elsevier, vol. 69(C), pages 494-514.
    15. Holm-Hadulla, Fédéric & Thürwächter, Claire, 2021. "Heterogeneity in corporate debt structures and the transmission of monetary policy," European Economic Review, Elsevier, vol. 136(C).
    16. Pham, Mia Hang, 2020. "In law we trust: Lawyer CEOs and stock liquidity," Journal of Financial Markets, Elsevier, vol. 50(C).
    17. Zhang, Ran & Li, Yanru & Liu, Yingzhu, 2021. "Green bond issuance and corporate cost of capital," Pacific-Basin Finance Journal, Elsevier, vol. 69(C).
    18. Lugo, Stefano, 2019. "Insider ownership and the cost of debt capital: Evidence from bank loans," International Review of Financial Analysis, Elsevier, vol. 63(C), pages 357-368.
    19. Shen, Carl Hsin-han & Zhang, Hao, 2020. "What's good for you is good for me: The effect of CEO inside debt on the cost of equity," Journal of Corporate Finance, Elsevier, vol. 64(C).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Yu, Zhiyang & Yu, Kaibin & Ye, Ying & Wang, Canghong, 2024. "Corporate financialization and the spread of issuing bonds," Finance Research Letters, Elsevier, vol. 59(C).
    2. Atawnah, Nader & Zaman, Rashid & Liu, Jia & Atawna, Thaer & Maghyereh, Aktham, 2023. "Does foreign competition affect corporate debt maturity structure? Evidence from import penetration," International Review of Financial Analysis, Elsevier, vol. 86(C).
    3. Liu, Shasha & Wu, Yuhuan & Kong, Gaowen, 2024. "Politics and Robots," International Review of Financial Analysis, Elsevier, vol. 91(C).
    4. Kong, Gaowen & Huang, Jiating & Kong, Dongmin & Zhu, Ling, 2023. "Female executives, industrial robots, and stock price crash risk," Finance Research Letters, Elsevier, vol. 57(C).
    5. Christoph Kaufmann, 2023. "Investment Funds, Monetary Policy, and the Global Financial Cycle," Journal of the European Economic Association, European Economic Association, vol. 21(2), pages 593-636.
    6. Luo, Yan & Wang, Xiaohuan & Zhang, Chenyang & Huang, Wei, 2021. "Accounting-based downside risk and expected stock returns: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 78(C).
    7. Andersson, Malin & Maurin, Laurent & Rusinova, Desislava, 2021. "Market finance as a spare tyre? Corporate investment and access to bank credit in Europe," Working Paper Series 2606, European Central Bank.
    8. Li, Jingxin & Ye, Yong & Li, Jingxuan, 2024. "Performance feedback and corporate maturity mismatch: Evidence from China," Research in International Business and Finance, Elsevier, vol. 67(PB).
    9. Song, Fenghua & Thakor, Anjan & Quinn, Robert, 2023. "Purpose, profit and social pressure," Journal of Financial Intermediation, Elsevier, vol. 55(C).
    10. Almaghrabi, Khadija S., 2023. "Local product market competition and investment home bias," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 88(C).
    11. Goldstein, Michael A. & Namin, Elmira Shekari, 2023. "Corporate bond liquidity and yield spreads: A review," Research in International Business and Finance, Elsevier, vol. 65(C).
    12. Gabriela Brendea & Fanuta Pop & Loredana Mihalca, 2022. "Capital Structure and Firm Performance: The Case of Central and Eastern European Economies," Journal of Economics / Ekonomicky casopis, Institute of Economic Research, Slovak Academy of Sciences, vol. 70(5), pages 430-449, May.
    13. Basu, Debarati & Sen, Kaustav, 2022. "Organizational form and access to capital: The role of regulatory interventions," Journal of Contemporary Accounting and Economics, Elsevier, vol. 18(3).
    14. Zhang, Mingyue & Peng, Donghui, 2023. "The impact of digital transformation on corporate cross-border mergers and acquisitions," Finance Research Letters, Elsevier, vol. 58(PB).
    15. Jin, Ming & Liu, Jinshan & Chen, Zhongfei, 2022. "Impacts of social trust on corporate leverage: Evidence from China," International Review of Economics & Finance, Elsevier, vol. 77(C), pages 505-521.
    16. Aflatooni, Abbas & Ghaderi, Kaveh & Mansouri, Kefsan, 2022. "Sanctions against Iran, political connections and speed of adjustment," Emerging Markets Review, Elsevier, vol. 51(PB).
    17. Zhang, Yijun & Meng, Zhenzhen & Song, Yi, 2023. "Digital transformation and metal enterprise value: Evidence from China," Resources Policy, Elsevier, vol. 87(PB).
    18. Galanti, Sébastien & Leroy, Aurélien & Vaubourg, Anne-Gaël, 2022. "Investment and access to external finance in Europe: Does analyst coverage matter?," International Review of Financial Analysis, Elsevier, vol. 81(C).
    19. Alena Audzeyeva & Xu Wang, 2023. "Fundamentals, real-time uncertainty and CDS index spreads," Review of Quantitative Finance and Accounting, Springer, vol. 61(1), pages 1-33, July.
    20. Biswas, Sonny & Zhai, Wei, 2021. "Economic policy uncertainty and cross-border lending," Journal of Corporate Finance, Elsevier, vol. 67(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:finlet:v:58:y:2023:i:pb:s1544612323007766. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/frl .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.