Risk aversion and the yield of corporate debt

Article Abstract:

A model that estimates the default risk of corporate bonds is introduced. The corporate bonds concerned are investment-grade and speculative-grade bonds. A Kalman filtering approach is used to determine the risk premium related to risk aversion by investors. Nonlinear regression findings show that the present model functions better than previous models that exaggerate the implied default rates of bonds. Investors have also been found to receive enough compensation for risky bond investments.

Models, Risk assessment, Beliefs, opinions and attitudes, Investors, Debt financing (Corporations), Debt financing, Risk perception

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Corporate groups, dual-class shares and the value of voting rights

Article Abstract:

The creation of business groups are found to have a similar effect on voting premiums similar to that of deviating from the principle of the one-vote-one-share policy. Results from Italian companies show that voting premiums enjoy a multiplier effect from having both subsidiaries and non-voting stocks. Moreover, results show that the voting premium is larger for companies issuing non-voting stock than for companies not issuing non-voting shares.

Investor Relations, Corporate governance, Voting rights (Stockholders), Dual-class common stock, Dual class common stocks

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The reaction of bank stock prices to news of derivatives losses by corporate clients

Article Abstract:

The impact of derivatives losses announced in 1994 by corporate clients, on the stock prices of banks is examined in detail, with a focus on Bankers Trust.

Investment Banking and Securities Dealing, Investment Banking, Security brokers and dealers, Banking industry, Investment banks, Derivatives (Financial instruments), Securities

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