for helpful comments. Ki Beom Binh, Yong Hyuk Choi, Jiyoon Lee and Andre De Souza provided outstanding research assistance. All errors are our own. The views expressed herein are those of the author(s) and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peerreviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

We investigate whether liquidity is an important price factor in the US corporate bond market.In particular, we focus on whether liquidity effects are more pronounced in periods of financial crises, especially for bonds with high credit risk, using a unique data set covering more than 20,000 bonds, between October 2004 and December 2008. We employ a wide range of liquidity measures and find that liquidity effects account for approximately 14% of the explained market-wide corporate yield spread changes. We conclude that the economic impact of the liquidity measures is significantly larger in periods of crisis, and for speculative grade bonds.JEL-Classification: G01, G12, G14.

In this paper we study the determinants of business groups' ownership structure using a unique dataset of Korean chaebols, and a set of new metrics of group ownership structure. We find that chaebols grow vertically (that is, pyramidally) as the family uses well-established group firms ("central firms") to set up and acquire firms that have low profitability and high capital requirements. Chaebols grow horizontally (that is, using direct family ownership) when the family acquires firms that are highly profitable and require less capital. We also provide direct evidence that the low profitability of firms owned through pyramids is partly due to a selection effect: the profitability of new group firms in the year before they are added to the group predicts whether they are added to pyramids or controlled directly by the family. The relationships between pyramids, profitability, and capital intensity that we uncover do not appear to be due to the separation between ownership and control induced by pyramids. Finally, we find that the selection of low-profitability firms into pyramids causes the group's central firms to trade at a discount relative to other public group firms. Taken together, these results suggest that controlling families optimally design the ownership structure of the group in a manner that is consistent with theory.

We investigate whether liquidity is an important price factor in the US corporate bond market.In particular, we focus on whether liquidity effects are more pronounced in periods of financial crises, especially for bonds with high credit risk, using a unique data set covering more than 20,000 bonds, between October 2004 and December 2008. We employ a wide range of liquidity measures and find that liquidity effects account for approximately 14% of the explained market-wide corporate yield spread changes. We conclude that the economic impact of the liquidity measures is significantly larger in periods of crisis, and for speculative grade bonds.JEL-Classification: G01, G12, G14.

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