Information Flow Risk, Supply Chain Characteristics and Corporate Bond Yield Spreads※

This study explores the relations between information flow risk, supply chain characteristics, and corporate bond yield spreads by employing American bond market data. This study finds that suppliers ’ information flow risk plays an important role in explaining bond yield spreads when controlling for credit ratings and other well known variables. The empirical results also show that bond yield spreads positively relate to the degree of concentration of supplier / customer industries (concentration effects) while they negatively relate to the R&D intensities of its suppliers (R&D effects). Specifically, information asymmetry (proxy of information flow risk) of suppliers significantly alleviates their concentration effects on bond yield spreads, whereas it less likely mitigates the R&D effects