Determinants of corporate bond yield

The case of Malaysian bond market

Norliza Che-Yahya, Ruzita Abdul Rahim, Rasidah Mohd-Rashid

Research output: Contribution to journalArticle

2 Citations (Scopus)

Abstract

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.

Original languageEnglish
Pages (from-to)245-258
Number of pages14
JournalInternational Journal of Business and Society
Volume17
Issue number2
Publication statusPublished - 1 Aug 2016

Fingerprint

Corporate bonds
Bond yields
Bond market
Default risk
Multiple regression
Debt
Lending
Coupons
Payment
Return on equity
Interest rates
Maturity
Rating
Equity
Illiquidity

Keywords

  • Corporate bond yield
  • Malaysian bond market

ASJC Scopus subject areas

  • Economics and Econometrics
  • Finance
  • Strategy and Management
  • Business and International Management

Cite this

Determinants of corporate bond yield : The case of Malaysian bond market. / Che-Yahya, Norliza; Abdul Rahim, Ruzita; Mohd-Rashid, Rasidah.

In: International Journal of Business and Society, Vol. 17, No. 2, 01.08.2016, p. 245-258.

Research output: Contribution to journalArticle

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