Theses Doctoral

Essays in Financial Economics

Siani, Kerry Yang

This dissertation studies topics in financial economics. In the first chapter, Raising Bond Capital in Segmented Markets, I study the cost of bond capital. The cost of bond capital to firms that is determined at issuance often exceeds yields trading in secondary bond markets. I find that the difference between yields at issuance and in secondary markets, the ``issuance premium'', spikes in bad times, increasing firms' costs of capital. This suggests that the economics of the relatively understudied primary bond markets -- where firms sell new bonds via underwriters to investors -- are important for understanding firms' costs of capital and access to credit over the cycle. Leveraging new data on bond issuance, I estimate a model of primary markets that explains the issuance premium and its impact on bond issuance volume. Using high-frequency variation in bond supply as an instrument, I find that investors are more sensitive to issuance premiums than the remainder of credit spreads. As issuance premiums rise in bad times, the share of more price-elastic short-term investors endogenously increases, supporting bond volumes. The preferences of primary market investors therefore directly affect the transmission of shocks to firms' costs of capital and bond issuance volume, as well as the price impacts of corporate bond purchase policies.

The second chapter, Bond Market Stimulus: Firm-Level Evidence from 2020-21, is co-authored with Olivier Darmouni. We use micro-data on corporate balance sheets to study firm behavior after the unprecedented policy support to corporate bond markets in 2020. We find that as bond yields fell, firms issued bonds to accumulate large and persistent amounts of liquid assets instead of investing. Conceptually, the benefits depend on how highly bond issuers valued this liquidity at the margin. We show they generally had access to bank liquidity that they chose not to use: many issuers left their credit lines untouched, while others used bonds to repay existing loans. Moreover, equity payouts remained high: almost half of issuers still repurchased shares in Spring 2020.

In the third chapter, Global Demand Spillovers: the Role of Underwriting Networks, I study the role of underwriter networks in transmitting demand shocks across global jurisdictions. Using novel data and a difference-in-differences strategy, I find that central bank corporate bond purchases spill over to foreign jurisdictions through bond underwriting networks. The diff-in-diff exploits the European Central Bank's 2016 corporate sector purchase program. I compare U.S. firms connected to underwriters with more or less Eurozone clients. Firms connected with banks with more European clients had larger orderbooks and issued more at lower costs. Treated firms do not increase real investment, but rather increase equity payouts. I identify bond underwriting networks as a novel channel through which demand shocks spread across borders. These results matter for understanding the overall impact of corporate quantitative easing programs.

Geographic Areas


  • thumnail for Siani_columbia_0054D_17103.pdf Siani_columbia_0054D_17103.pdf application/pdf 2.34 MB Download File

More About This Work

Academic Units
Thesis Advisors
Jiang, Wei
Darmouni, Olivier
Ph.D., Columbia University
Published Here
April 13, 2022