Financial Constraints and Corporate Disclosure: Evidence from Capital Market Segmentation∗
نویسندگان
چکیده
The sharp distinction drawn between firms rated narrowly above (BBB–) and below (BB+) the investment-grade cutoff provides variation in debt financing availability unrelated to firm fundamentals. We exploit this market segmentation to identify an asymmetric effect of debt capital supply on voluntary disclosure: BB+ firms step up disclosure in response to high-yield bond mutual fund outflows. This effect is concentrated in periods of large fund outflows and among financially constrained firms. Conditional on greater disclosure, these firms increase equity issuance. Thus, disclosure may alleviate information-based financing frictions, allowing firms to smooth out temporary disruptions to the availability of finance. JEL Classification: D82; G24; G32; M41
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