Is it Worthwhile to Augment the Legal Protection of Public Debt Placed by Privately Held Companies?

Keren Bar Hava, Roi Katz and Beni Lauterbach

Journal of Law, Finance, and Accounting, 2019, vol. 4, issue 1, 67–101

Abstract: We examine the effects of a law amendment in Israel in 2011 that imposes a set of minimum corporate governance standards on privately held firms that issue publicly traded bonds. Two main results emerge. First, consistent with US evidence, the improved bondholder protection boosts the immediate market valuation of private firms’ bonds. Second, the amendment suppresses the private bonds market. After the amendment enactment, the number of private bond IPOs decreases sharply, and an extraordinary proportion of private firms redeem their existing public bonds early. However, given that the exiting firms had more related party transactions, it can be argued that the amendment increases market quality.

Keywords: Public bonds of privately held companies; corporate governance improvements; Regulatory reforms in bond markets (search for similar items in EconPapers)
JEL-codes: G32 G34 G38 (search for similar items in EconPapers)
Date: 2019
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://dx.doi.org/10.1561/108.00000034 (application/xml)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:now:jnllfa:108.00000034

Access Statistics for this article

More articles in Journal of Law, Finance, and Accounting from now publishers
Bibliographic data for series maintained by Lucy Wiseman ().