Bond Yields, Ratings, and Financial Information: Evidence from Public Utility Issues

Sara A. Reiter, David A. Ziebart

Research output: Contribution to journalArticlepeer-review

27 Scopus citations

Abstract

This study investigates the relative roles of bond ratings and financial information in the setting of bond yields. Structural equation modeling techniques are used to learn whether ratings determine yields or whether both ratings and yields are determined by a concurrent set of economic and financial factors. Tests of alternative structural model configurations provide evidence regarding the associations between bond ratings, financial information, and bond yields. Both ratings and financial information are found to play an important role in determining bond yields. In addition, yields are consistent with the higher rating in cases of split ratings.

Original languageEnglish
Pages (from-to)45-73
Number of pages29
JournalFinancial Review
Volume26
Issue number1
DOIs
StatePublished - Feb 1991

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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