Using a sample of 3228 bond issues of U.S. publicly traded companies from 1990 to 2021, we find a statistically significant negative stock market reaction surrounding the announcements of debt issues aimed at refinancing outstanding debt when compared to debt issues for other purposes. The results are not driven by public debt being used to refinance “inside” debt, such as bank loans. This finding aligns with signaling theory, which suggests that replacing existing debt with new debt may indicate unfavorable conditions: difficulty servicing current debt obligations with existing resources or a lack of future growth opportunities. These negative market reactions are mitigated, however, when firms use less risky senior debt to refinance existing debt. Senior notes serve as a strategic move by firms to counter the negative market perception associated with debt refinancing issues. The findings are particularly more pronounced for the decades after 1999, albeit with a reduced magnitude in the 2010s, suggesting that the Global Financial Crisis in the 2000s made markets more sensitive to negative signals related to public debt refinancing. The main findings are robust to potential biases brought about by measurement errors, simultaneity, and endogeneity.

We examine the pricing of restrictive covenants on bond issues before and after the financial crisis. The existing literature in this area uses data from the pre-crisis period. While the results of our analysis using pre-crisis data are entirely consistent with existing literature, there are dramatic differences in the value of restrictive covenants between the two periods. Further, the differences between the coefficients on the control variables document and elucidate the very different bond market dynamics before and after the crisis. Before the financial crisis, we find a statistically significant cost reduction of around 50 basis points for the inclusion of negative pledges and restrictions on sale-and-leaseback activity. In the post-financial crisis period, however, the benefit of these types of covenants evaporates, becoming statistically insignificant. The benefits, for investment grade firms, of restrictions on investment activities survives the financial crisis; the price effect in the pre-crisis period is a statistically significant 60 to 72 basis point (depending on model) reduction in yields, while in the post-crisis period it is a statistically significant 51 to 55 basis point reduction in yields. For non-investment grade firms, we find in the pre-crisis period that the price effect of restrictions on payouts and additional debt are insignificant. After the financial crisis, however, these restrictions lead to a statistically significant 141 to 150 basis point reduction in yields.

Existing literature suggests that publication space within and across disciplines is unevenly spaced and that “home bias” and “barriers to entry” negatively impact publication potential, possibly limiting journal accessibility and author inclusivity. We investigate these issues within the field of finance, while considering journal quality, adding another dimension to the literature. Among the quality finance journals included in our study, we find little evidence against inclusiveness with respect to the average number of authors per paper or the percentage of unique authors; however, our analysis indicates that geographical diversity differs among the journals. Consistent with the higher proportion of top finance programs in the U.S., Tier 1 journals exhibit a higher authorship concentration in North America, relating journal quality and geographical diversity. Yet, Tier 2 journals demonstrate a broader regional representation than Tier 3 journals, indicating that geographical inclusivity is not driven exclusively by journal quality. Finally, our results consistently suggest that JBF is the most geographically inclusive journal among the 17 quality finance journals in our study.