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<p>This paper investigates the effect of policy uncertainty on offering yield spreads using a comprehensive corporate bond issuing dataset. Empirical evidence shows a significant positive impact of policy uncertainty on offering yield spreads of bonds. This effect is more substantial for firms with higher exposure to tax policy, greater dependence on external finance, a less transparent information environment, and a weaker economy. Bond covenants moderate the uncertainty effect as covenants provide a trigger for renegotiation. Further analysis shows that the policy uncertainty premium in the bond market drives the negative impact of policy uncertainty on corporate investments.</p>

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Policy uncertainty and corporate bond issuance costs

  • 期刊论文

  • 出版模式：

    开放获取

  • 发表日期：

    2025年2月2日

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  • Junbo Wang,
  • Chunchi Wu,
  • Xiaoguang Yang,
  • Ye Zhou

摘要

This paper investigates the effect of policy uncertainty on offering yield spreads using a comprehensive corporate bond issuing dataset. Empirical evidence shows a significant positive impact of policy uncertainty on offering yield spreads of bonds. This effect is more substantial for firms with higher exposure to tax policy, greater dependence on external finance, a less transparent information environment, and a weaker economy. Bond covenants moderate the uncertainty effect as covenants provide a trigger for renegotiation. Further analysis shows that the policy uncertainty premium in the bond market drives the negative impact of policy uncertainty on corporate investments.