Wealth Effects of Corporate Debt Issues: The Impact of Issuer Motivations

Aigbe Akhigbe, John C. Easterwood and R. Richardson Pettit

Financial Management, 1997, vol. 26, issue 1

Abstract: This study documents a link between the market's reaction to a new issue announcement and the issuer's motivation for both debt and equity issues. Negative and significant price reactions occur for outstanding debt and equity when the issuer faces an unexpected cash flow shortfall. Insignificant reactions accompany unexpected increases in capital expenditures or leverage or an expected debt refinancing.

Date: 1997
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Persistent link: https://EconPapers.repec.org/RePEc:fma:fmanag:akhigbe97

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