How do Canadian mining, quarrying, and oil and gas extraction firms’ characteristics explain their borrowing preference between privately and publicly offered bonds?

Abstract

This study examines the bond issuance choice between private placement and public placement among 148 Canadian firms in the mining, quarrying, and oil and gas extraction sector over a sample period of 2006 – 2015. Firms that issued bonds during the sample period under analysis can be divided into three groups. Group 1 firms only issue bonds privately. Group 2 firms only issue bonds publicly and Group 3 firms issue bonds both publicly and privately. Overall, for Canadian mining, quarrying, and oil and gas extraction corporations, this paper shows that most of their characteristics cannot explain their borrowing preferences between privately and publicly offered bonds. In other words, firms from these sectors may consider other factors such as disclosure requirements to be the main determinants when making a borrowing choice.