Relative Influence of Push Attributes and Pull Factors on Corporate Debt Issuance

Many corporate events are self-selected, but the relative impact of internal (firm-specific) and external (environmental) influences on discretionary corporate decisions remains largely unknown. In this paper, focusing on corporate debt issuance, we apply the contemporary push-pull theory to establish whether bond issuance are pushed by the firms due to internal considerations, or pulled by the enticement of exogenous forces. We explore the impact of eight firm-specific push attributes and four systematic pull factors on the likelihood and volume of five types of debt issued, and disentangle the relative significance of push and pull effects. We find three key results. First, unconditionally, both firm-specific push attributes and exogenous pull factors are relevant. Second, the relative significance of push effects are always decidedly larger than those of pull effects. Finally, pull factors have no conditioning role in how markets react to debt issuance. Although pull effects do matter, push effects compellingly dominate.