Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/278580 
Year of Publication: 
2023
Series/Report no.: 
ECB Working Paper No. 2816
Publisher: 
European Central Bank (ECB), Frankfurt a. M.
Abstract: 
I study the causal effect of bond investor demand on the financing and investment decisions of nonfinancial firms using granular data on the bond transactions of U.S. insurance companies. Liquidity inflows from insurance premiums combined with insurers' persistent investment preferences identify bond demand shifts, which raise bond prices and reduce firms' financing costs. In response, firms issue more bonds, especially when they have well-connected bond underwriters. The proceeds are used for investment rather than shareholder payouts, particularly by financially constrained firms. The results emphasize that bond investors significantly affect corporate financing and investment decisions through their price impact.
Subjects: 
nstitutional Investors
Insurance
Corporate Bonds
Corporate Investment
JEL: 
G12
G22
G23
G3
G32
Persistent Identifier of the first edition: 
ISBN: 
978-92-899-6079-3
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.