Working Paper
Financial contracting and the choice between private placement and publicly offered bonds
Kwan, Simon H.; Carleton, Willard T. (2004)
Private placement bonds have unique financial contracting in controlling borrower-lender agency conflicts due to direct monitoring and the relative ease of future renegotiation. Our data show that private placements are more likely to have restrictive covenants and are more likely to be issued by smaller and riskier borrowers. We find the determinants of bond yield spreads to be quite different between private placements and public issues, reflecting the different institutional arrangements between the two markets. Finally, in issuing bonds, we find that firms self-select the bond type to ...
Working Paper Series , Paper 2004-20

Working Paper
The role of private placement debt issues in corporate finance
Kwan, Simon H.; Carleton, Willard T. (1995)
Private placement debt issues are more effective than public bonds in resolving information asymmetries and controlling moral hazard problems. Firms that issue only private placements (non-switchers) are found to have more information problems than firms that have access to the public bond market (switchers), and therefore are required to pay more for their private placements. Moreover, switchers switch to private placements when the financing situation involves material information asymmetry that is unsuitable for issuing public bonds. For general purposes financing, switchers switch to ...
Working Papers in Applied Economic Theory , Paper 95-13