We would like to thank the editor, Scott Hein, and particularly the associate editor, Andrea Heuson, and the referee, Ryan Bubley, for their valuable comments and suggestions. We would also thank the participants at 2012 Southern Finance Association meetings, 2013 Midwest Finance Association meetings, and Nankai University. All errors are ours.
DEBT IPO WAVES, INVESTOR SENTIMENT, MARKET CONDITIONS, AND ISSUE QUALITY
Version of Record online: 10 DEC 2013
© 2013 The Southern Finance Association and the Southwestern Finance Association
Journal of Financial Research
Volume 36, Issue 4, pages 435–452, Winter 2013
How to Cite
Cai, K. N., Jiang, X. and Lee, H. W. (2013), DEBT IPO WAVES, INVESTOR SENTIMENT, MARKET CONDITIONS, AND ISSUE QUALITY. Journal of Financial Research, 36: 435–452. doi: 10.1111/jfir.12018
- Issue online: 10 DEC 2013
- Version of Record online: 10 DEC 2013
We examine the aggregate volume of straight debt initial public offerings (DIPOs) from 1970 to 2010. We find that aggregate DIPO activities display wave patterns. Both the number and total proceeds of DIPOs vary substantially over time. DIPO volume is significantly associated with yield spread, aggregate book-to-market ratio, stock return volatility, lagged equity IPO volume, and term spread, suggesting that investor sentiment and capital market conditions play significant roles in explaining time variations in DIPO volume. We also find that speculative-grade DIPO issues synchronize with the business cycles, while investment-grade issues display a steady or countercyclical pattern.