Arbeitspapier

Investor-driven corporate finance: Evidence from insurance markets

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.

ISBN
978-92-899-6079-3
Sprache
Englisch

Erschienen in
Series: ECB Working Paper ; No. 2816

Klassifikation
Wirtschaft
Asset Pricing; Trading Volume; Bond Interest Rates
Insurance; Insurance Companies; Actuarial Studies
Pension Funds; Non-bank Financial Institutions; Financial Instruments; Institutional Investors
Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
Thema
nstitutional Investors
Insurance
Corporate Bonds
Corporate Investment

Ereignis
Geistige Schöpfung
(wer)
Kubitza, Christian
Ereignis
Veröffentlichung
(wer)
European Central Bank (ECB)
(wo)
Frankfurt a. M.
(wann)
2023

DOI
doi:10.2866/981589
Handle
Letzte Aktualisierung
10.03.2025, 11:41 MEZ

Datenpartner

Dieses Objekt wird bereitgestellt von:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.

Objekttyp

  • Arbeitspapier

Beteiligte

  • Kubitza, Christian
  • European Central Bank (ECB)

Entstanden

  • 2023

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