Research Magazine 2016

Executive Takeaways

■ Clawback provision allows issuer to access capital desperately needed but it is costly. ■ Bonds with clawbacks command higher yields – about 80 bps higher, than comparable bonds.

■ Firms facing temporary capital constraints are more likely to exercise the clawback. ■ Constrained firms unable to realize better prospects often renegotiate high cost IPOC.

Gabriel G. Ramírez, Professor of Finance

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