Sharif Digital Repository

We examine the economic implications of the SEC disclosure rules for companies doing business with Iran on their riskiness of debt. We exploit Section 219 of the Iran Threat Reduction and Syria Human Rights Act (ITRA), which requires companies listed on U.S exchanges to disclose their activities and transactions with Iranian institutions. We analyze the impact of the first ITRA disclosure on the cost of capital for both American and foreign companies listed on the US exchanges. Using a difference-in-difference approach, we document a negative impact of ITRA disclosures on loan spread and credit rating of foreign companies. Further, using textual analysis, we identify the elements in the... 

Fixed-income funds' success in attracting money to the market is a significant contributing factor to the expansion of the Iranian bond market. Bonds, on average, constitute more than 40 percent of fixed-income funds' portfolios. These funds guarantee a monthly minimum profit of between 1.5-2 percent. On the other hand, stocks, on average, constitute more than 10 percent of fixed-income funds' portfolios. Because of extreme fluctuations in recent years in the stock market, there was significant volatility in those portfolios. The fluctuations in portfolios and guaranteed minimum profit make us think that funds may manipulate other assets, specifically the bonds, to smooth monthly returns. In...