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Bond Yields, Ratings, and Financial Information: Evidence from Public Utility Issues
Author(s) -
Reiter Sara A.,
Ziebart David A.
Publication year - 1991
Publication title -
financial review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.621
H-Index - 47
eISSN - 1540-6288
pISSN - 0732-8516
DOI - 10.1111/j.1540-6288.1991.tb00369.x
Subject(s) - bond , structural equation modeling , bond credit rating , econometrics , set (abstract data type) , actuarial science , economics , finance , psychology , statistics , computer science , mathematics , credit risk , credit reference , programming language
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.