Prof. Dirk Hackbarth from Washington University in St. Louis is giving a VGSF research seminar on "Corporate Bond Credit Spreads and Forecast Dispersion" on FRIDAY, Nov. 3rd, from 15:30 to 17:00 at the WU Wien (Seminarraum D204, UZA 4, Nordbergstrasse 15, 1090 Wien, see http://www.wu-wien.ac.at/portal/ueber_wu/standorte/lageplan4 for a detailed plan). Please find the paper's abstract below.

Dirk asked me NOT to put his paper onto our webpage. If you want to get the paper, please contact me via email and I send it to you.

Dirk is going to be available for meetings on Friday. If you are interested, please contact Michael Halling (michael.halling@univie.ac.at).

Best, Michael Halling

Abstract Recent research establishes a negative relation between stock returns and dispersion of analysts' earnings forecasts, arguing that, due to short-sale constraints in equity markets, asset prices more reflect the views of optimistic investors. In this article, we examine whether a similar effect prevails in corporate bond markets. After controlling for common bond-level, firm-level, and macroeconomic variables, we find evidence that bonds of firms with higher dispersion demand significantly higher credit spreads than otherwise similar bonds and that changes in dispersion reliably predict changes in credit spreads. We argue the dominating effect of dispersion is to proxy for future cash flow uncertainty due to the limited role of short-sale constraints in corporate bond markets.