The Wall Street Journal has an interesting article on Chilango's bond issuance (hat tip: Graeme Acheson). Chilango is a Mexican fast-food outlet in London, which is seeking to expand across London. To achieve this, they have issued a four-year bond with an 8% coupon. However, for those who invest £10,000 in the bonds, there is an additional coupon in the form of a free burrito every week during the lifetime of the bond. This seems to be a trend, with Hotel Chocolat paying its bond coupon with chocolate (see video below)! Issuing bonds helps small firms bypass banks and they are not a new innovation. Small firms financed themselves in this manner before 1913.
Daron Acemoglu, Simon Johnson, Amir Kermani, James Kwak and Todd Mitton have written a paper on whether firms connected to Timothy Geithner benefited from these connections. They do so by looking at how stocks of these firms reacted to the announcement that he was a nominee for Treasury Secretary in November 2008. They find that there were large abnormal returns for connected firms. Below is the paper's abstract and the full paper is available here . The announcement of Timothy Geithner as nominee for Treasury Secretary in November 2008 produced a cumulative abnormal return for financial firms with which he had a connection. This return was about 6% after the first full day of trading and about 12% after ten trading days. There were subsequently abnormal negative returns for connected firms when news broke that Geithner's confirmation might be derailed by tax issues. Excess returns for connected firms may reflect the perceived impact of relying on the advice of a small ne...