Do corporate bond funds have a real impact on firm policies? In this paper, we examine whether fund herding alters the overall information environment of a firm’s credit risk, and thus affects the firm’s decision to issue bonds. Using the firm-level measure of herding by U.S. bond mutual...

A low-interest rate environment induces higher demand for income-generating assets, such as high-dividend stocks and high-coupon bonds. In this paper, we explore the impact of this “reaching-for-income” phenomenon on fund flows of corporate bond mutual funds. We find that high...