«Essays on Debt Financing»
On Thursday 12 March 2020 Negar Ghanbari will hold a trial lecture on a prescribed topic and defend her thesis for the PhD degree at NHH.
Prescribed topic for the trial lecture:
«Green bonds»
Trial lecture:
10:15 in Karl Borch Aud, NHH
Title of the thesis:
Essays on Debt Financing
Summary:
This thesis consists of three papers on debt financing. The first paper studies the effect of creditor rights on the design of corporate bank loans. Focusing on conflict of interest between creditors, Ghanbari examine how a legal change, which strengthens the protection of creditors in securitization transactions, impacts loan contracts. Enabling securitization creditors to fully seize their collateral, reduces their incentives to maximize recoveries in bankruptcy, increasing the risk of other creditors, such as banks.
Ghanbari find that bank loans granted to firms using securitization have higher interest rates, smaller size, and more covenants after law change. These effects are stronger for firms with higher default risk. I also find that these firms consequently decrease their leverage and investments.
The second paper examines the role of liquidity for the use of callable bonds. Call provisions give firms the option to retire the bond before maturity. Previous research shows when liquidity in secondary market is low, bonds in primary market are issued with shorter maturities and higher yields.
Ghanbari argue that when liquidity is poor, firms may desire to include call provision as a tool to mitigate adverse liquidity effects. Using call provisions allows firms to redeem the bond early, issuing a new bond with improved terms under better liquidity conditions. Ghanbari find that firms are more likely to issue callable bonds when liquidity is low. She also find that the likelihood of retiring callable bonds is positively linked to liquidity improvements.
The third paper examines the effect of credit supply on corporate debt structure, exploring the role of asset securitization. Securitization gives firm access to high-grade debt and provides additional capital. Ghanbari find that securitization leads to a reduction in the fraction of bank loans and subordinated bonds. A bond-level analysis also reveals that securitization increases the probability of bond redemption.
Defense:
12:15 in Karl Borch Aud, NHH
Members of the evaluation committee:
Professor Svein-Arne Persson (leader of the committee), Department of Finance, NHH
Associate Professor Ramin Bagha, Stockholm School of Economics
Associate Professor Jens Dick-Nielsen, Copenhagen Business School
Supervisors:
Professor Nils Friewald (main supervisor), Department of Finance, NHH
Professor Karin S. Thorburn, Department of Finance, NHH
The trial lecture and thesis defence will be open to the public. Copies of the thesis will be available from presse@nhh.no.