The announcement impact of seasoned equity offerings on bondholder wealth
Previous studies document a negative return to equity on the announcement of an SEO. However, the effects of SEO announcements on bonds have received little attention. We find that bondholders experience a significant positive return on the announcement of an SEO and this effect is more pronounced f...
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| Veröffentlicht in: | Journal of banking & finance 2009-08, Vol.33 (8), p.1472-1480 |
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| container_title | Journal of banking & finance |
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| creator | Elliott, William B. Prevost, Andrew K. Rao, Ramesh P. |
| description | Previous studies document a negative return to equity on the announcement of an SEO. However, the effects of SEO announcements on bonds have received little attention. We find that bondholders experience a significant positive return on the announcement of an SEO and this effect is more pronounced for bonds with lower ratings. We examine alternate explanations for bond market reactions to SEO announcements including the leverage risk reduction, wealth transfer, and information signaling hypotheses. Overall, our results are most consistent with the leverage risk reduction hypothesis. |
| doi_str_mv | 10.1016/j.jbankfin.2009.02.011 |
| format | Article |
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| ispartof | Journal of banking & finance, 2009-08, Vol.33 (8), p.1472-1480 |
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| language | eng |
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| source | RePEc; Elsevier ScienceDirect Journals Complete |
| subjects | Bond market Bond markets Enterprises Equity Excess bond returns Impact analysis Information Information signaling Investment returns Rates of return Securities issues Security issuance Security issuance Excess bond returns Information signaling Wealth transfer hypothesis Stock offerings Studies Wealth Wealth transfer hypothesis |
| title | The announcement impact of seasoned equity offerings on bondholder wealth |
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