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Economics

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The long-run performance of stock returns following debt offerings

Article Abstract:

The long-run post-issue underperformance by companies making straight and convertible debt offerings between 1975 and 1989 is analyzed. This long-run underperformance is more evident for smaller, younger and NASDAQ-listed companies, and for companies issuing speculative debts. There is also clear evidence that the underperformance of issuers of both straight and convertible debt is restricted to those issues during the periods with a high volume of issues. Like equity offerings, the findings show that debt offerings are signals that the company is overvalued.

Investor Relations, Research, Stocks, Return on investment, Rate of return

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Deregulation, disintermediation, and agency costs of debt: evidence from Japan

Article Abstract:

A study was conducted to determine the financing behavior of Japanese companies following the easing of access to the public bond market in the 1980s. Specifically, the study tried to determine the mix of public bonds and monitored bank loans as it relates to variables that serve as proxies for agency costs of debt. The study found that the proportion of bank debt is directly related to growth opportunities, while the proportion of bond debt is inversely proportional to growth opportunities.

Debt & Capital Management, Japan, Finance, Bonds, Bonds (Securities), Corporations, Corporate finance, Financial management, Debt financing (Corporations), Debt financing, Bank loans

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