Debt Issuance Under Rule 144A and Equity Valuation Effects

Peter Carayannopoulos () and Subhankar Nayak ()
Additional contact information
Peter Carayannopoulos: Financial Services Research Centre, School of Business and Economics, Wilfrid Laurier University, 75 University Avenue West, Waterloo, Canada N2L 3C5, Canada
Subhankar Nayak: Financial Services Research Centre, School of Business and Economics, Wilfrid Laurier University, 75 University Avenue West, Waterloo, Canada N2L 3C5, Canada

Review of Pacific Basin Financial Markets and Policies (RPBFMP), 2013, vol. 16, issue 01, 1-40

Abstract: We compare valuation effects associated with debt issuance under SEC Rule 144A versus issuance in the public market. We find that nonconvertible debt Rule 144A issuers experience an incremental positive announcement effect when compared to their counterparts issuing in the public market. We attribute this to the timing of issuance under favorable market conditions and a reduction in informational asymmetry due to lender specialization. When compared to their public counterparts, convertible Rule 144A bond issuers often experience negative announcement effects and inferior post-issuance stock performance. We argue that this negative market reaction arises from a stronger opportunistic market-timing signal.

Keywords: Debt financing; SEC Rule 144A; convertible bonds; equity valuation effects; market timing (search for similar items in EconPapers)
JEL-codes: G1 G2 G3 (search for similar items in EconPapers)
Date: 2013
References: View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.worldscientific.com/doi/abs/10.1142/S0219091513500070
Access to full text is restricted to subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wsi:rpbfmp:v:16:y:2013:i:01:n:s0219091513500070

Ordering information: This journal article can be ordered from

DOI: 10.1142/S0219091513500070

Access Statistics for this article

Review of Pacific Basin Financial Markets and Policies (RPBFMP) is currently edited by Cheng-few Lee

More articles in Review of Pacific Basin Financial Markets and Policies (RPBFMP) from World Scientific Publishing Co. Pte. Ltd.
Bibliographic data for series maintained by Tai Tone Lim ().