VALUATION EFFECT OF ISSUING NONSUBORDINATED VERSUS SUBORDINATED DEBT

VALUATION EFFECT OF ISSUING NONSUBORDINATED VERSUS SUBORDINATED DEBT

Recent studies analyzing stock market reaction to announcements of straight debt offerings report, in general, insignificant abnormal stock returns. In this study we examine the effect of debt seniority on market reaction. The evidence shows weakly positive abnormal returns upon the announcements of...

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Veröffentlicht in:The Journal of financial research 1993-04, Vol.16 (1), p.11-21
Hauptverfasser: Tang, Alex P., Singer, Ronald F.
Format: Artikel
Sprache:eng
Schlagworte:
Debt financing
Hypotheses
Rates of return
Securities markets
Studies
Valuation
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Beschreibung
Zusammenfassung:Recent studies analyzing stock market reaction to announcements of straight debt offerings report, in general, insignificant abnormal stock returns. In this study we examine the effect of debt seniority on market reaction. The evidence shows weakly positive abnormal returns upon the announcements of nonsubordinated straight debt offerings. In contrast, announcements of subordinated straight debt offerings induce significantly negative abnormal returns. Our findings generally support the information release hypothesis.
ISSN:0270-2592
1475-6803
DOI:10.1111/j.1475-6803.1993.tb00123.x