Corporate Bond Issuers

Willem Schramade was born in Woerden (Utrecht) on October 11, 1975 and grew up in Bodegraven, Rijen and Vlierden. In 1994 he obtained his Gymnasium diploma from the St. Willibrord Gymnasium in Deurne. Willem holds an MSc in Business Economics from Tilburg University, where he graduated in 2000 with a thesis on French IPOs, which ultimately (2006) resulted in a publication in the Journal of Corporate Finance. After brief spells at CPS in London and GE in Munich/Bergen op Zoom, Willem decided to go for the challenge of doing a PhD, and joined the ERIM PhD program in September 2002. He presented parts of his research at venues in Belgium, Denmark, Finland, Japan, the Netherlands, the UK and the US. The article version of Chapter 3 of his dissertation has been accepted for publication in the Pacific-Basin Finance Journal and he has several papers under review at academic journals. Willem’s teaching experience includes Corporate Finance and Financial Processes in the bachelor program of RSM Erasmus University as well as bachelor and master thesis supervision. Currently, Willem holds a dual position as a consultant for the Valuation & Strategy practice of PricewaterhouseCoopers in Amsterdam and as an assistant professor of Corporate Finance at the Erasmus School of Economics.

Whereas a lot of corporate finance research is focused on stocks, corporate bond finance is relatively unknown territory. In this thesis, we present four articles in which we study the costs and effects of financing with bonds. We follow corporate bond issuers from market entry, through subsequent issuers to the stage where they repurchase their bonds. In addition to the firms themselves, important players are bondholders, shareholders, management and intermediaries (banks). In the first paper, bond market entry is studied and related to agency costs of equity. Central is the question whether shareholders benefit from the presence of bonds in the firm’s capital structure. The second paper investigates the costs of issuing bonds (in terms of yields to maturity and fees paid to underwriters) in a bank-oriented system faced with deregulation. Are bond issues by firms with strong bank ties affected differently by regulation than those by independent firms? Whether frequent bond issuers enjoy lower yields is the subject of the third paper. Do firms benefit from enhanced reputations and better market literacy when doing repeat issues? Finally, the fourth article studies firms that repurchase their bonds, with a special focus on possible wealth transfers between bondholders and shareholders.

Ondernemingsfinanciering met aandelen krijgt traditioneel veel aandacht, zowel in de media als in academische kringen. Voor obligatiefinanciering is dat niet het geval, hoewel er meer obligaties worden uitgegeven dan aandelen. In dit proefschrift staan de kosten en effecten van obligatiefinanciering door bedrijven centraal. De vier onderzoeken volgen de emittenten vanaf hun eerste emissie tot aan het inkopen van hun eigen obligaties. Naast de bedrijven zelf zijn ook obligatiehouders, aandeelhouders, management en banken belangrijke spelers. Het eerste onderzoek (hoofdstuk 2) spitst zich toe op de eerste obligatie-emissie van een bedrijf om vast te stellen of aandeelhouders profiteren van de aanwezigheid van obligaties in de vermogensstructuur. In hoofdstuk 3 worden de kosten van obligatiefinanciering gerelateerd aan bankafhankelijkheid in de Japanse situatie van deregulering. Bankafhankelijkheid blijkt hogere financieringskosten met zich mee te brengen als de banken in problemen verkeren. Hoofdstuk 4 onderzoekt of frequentere emittenten kostenvoordelen genieten en vindt dat dit inderdaad het geval is, dankzij betere marktkennis en reputatie. Ondernemingen die hun eigen obligaties inkopen staan centraal in hoofdstuk 5. Deze inkopen blijken voordelig voor zowel obligatiehouders als aandeelhouders, met name wanneer de obligaties een lange resterende looptijd hebben.