Open AccessDETERMINANTS OF CORPORATE BOND YIELD: THE CASE OF MALAYSIAN BOND MARKET
Author(s) -
Norliza Che-Yahya,
Ruzita Abdul-Rahim,
Rasidah MohdRashid
Publication year - 2017
Publication title -
international journal of business and society
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.236
H-Index - 15
ISSN - 1511-6670
DOI - 10.33736/ijbs.523.2016
Subject(s) - coupon , corporate bond , bond , issuer , bond market , business , debt , bond credit rating , yield (engineering) , economics , financial economics , equity (law) , credit risk , monetary economics , actuarial science , finance , materials science , credit reference , metallurgy , political science , law
Default risk has been recognized as one of the key determinants of bond yield. Past studies argue that default risk can be reflected by issue characteristics, issuer characteristics and interest rate behaviors on riskless security. As default risk is believed to be higher in developing markets due to the issue of illiquidity, capital inadequacy and a developing lending system, more empirical works must be focused on these markets. The present study examines the association between selected determinants and corporate bond yield in Malaysian market. Instead of focusing on the aggregate market level as has widely been carried out in previous studies, the present study concentrates on the individual issue level. The results of cross-sectional multiple regression analyses based on 61 observations in 2012 indicate that bond maturity, coupon payment, trading frequency, issuer’s rating, debt to equity ratio and return on equity ratio are the significant determinants of bond yield.Keywords: Corporate Bond Yield; Malaysian Bond Market.