Finance Seminar（2017-07）

Topic: Index Membership and Capital Structure: International Evidence

Speaker: Vidhan K. Goyal, Hong Kong University of Science and Technology

Time: Wednesday, 22 March, 10:00-11:30

Location: Room 217, Guanghua Building 2

Abstract:

How much do shocks to the information environment in equity markets matter for debt supply and the financing of firms? We find that the use of debt increases by about two percentage points following exogenous additions of stocks to an index. The leverage response is primarily in public debt markets: Borrowing costs in these markets decrease, while bond liquidity increases. These results suggest that index additions affect leverage because an increase in public information reduces information asymmetries for lenders and increases their willingness to buy information-sensitive debt. Indeed, stocks added to an index are followed by more equity analysts. Overall, we support the view that information production in equity markets spills over into debt markets.

Introduction:

Vidhan Goyal is Professor of Finance at Hong Kong University of Science and Technology. Professor Goyal’s research interests are in capital structure, corporate governance, and debt contracts. His research papers have been published in top academic journals including the Journal of Business, Journal of Finance, Journal of Financial Economics, Journal of Financial and Quantitative Analysis, Review of Finance, Journal of Financial Intermediation, Financial Management, and Journal of Corporate Finance. Professor Goyal has also contributed a chapter to the Handbook of Empirical Corporate Finance.

Professor Goyal won the Jensen Prize for the Best Paper Published in the Journal of Financial Economics in the Areas of Corporate Finance and Organizations in 2003. He has many other research and teaching awards. In 2014, he received the Citation of Excellence Award for being the best and most highly cited Citation of Excellence winner for the past 15 years.

Professor Goyal is an Associate Editor of the Journal of Corporate Finance and Financial Management and Editor of the International Review of Finance. He is a member of the American Finance Association and Western Finance Association. He co-chaired the program committee of the Asian Finance Associations meetings in 2008 and 2009. Professor Goyal has also received many teaching awards including the Michael Gale Medal for Distinguished Teaching, which is the highest honor awarded to a single faculty each year by the Hong Kong University of Science and Technology.

www.vidhangoyal.com

Your participation is warmly welcomed!