SSRN-Corporate Bond Market Transparency and Transaction Costs by Amy Edwards, Lawrence Harris, Michael Piwowar
YES! If you love it when theory is found to be true as much as I do, then Edwards, Harris, and Piwowar have given us a reason to celebrate!
Not only do they show that transaction costs for corporate bonds are higher than for equities (a finding which helps explain the preference for firms to have less leverage than other models would suggest), but they also show that transaction costs of corporate bonds decrease when transparency increases! Yeah!!!
