The information content of bankruptcy filing on securityholders of the bankrupt firm: an empirical investigation

Article Abstract:

A study is conducted to examine the reaction of stockholders and secured, unsecured and convertible bondholders to firm-specific information about the cash flow prospects disclosed by bankruptcy announcements. The results show that such announcements elicit significant adverse stock price reaction and that announcement effects vary among the three groups of bondholders. Considerable negative price reaction is observed in the unsecured and the convertible bond classes, while no impact is noted in the secured debt class.

Research, Economics, Information theory, Bankruptcy, Information theory in economics

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Corporate partial acquisitions, total firm valuation and the effect of financing method

Article Abstract:

The effect of partial corporate acquisitions on valuation considerations such as that involving the wealth of stockholders and bondholders of the acquiring firm is analyzed. Results show that partial acquisitions should ideally not have any significant valuation effect. Nevertheless, any wealth loss of the firm is usually suffered by bondholders instead of stockholders. The financing method chosen determines the extent of such wealth transfer from bondholders to stockholders.

Usage, Finance, Acquisitions and mergers, Valuation

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Pension plan terminations, excess asset reversions and securityholder wealth

Article Abstract:

The impact of excess pension asset reversions on the bondholders and stockholders of the sponsoring firm is examined using the redeployment and negative signalling hypotheses. Results show that plan terminations transfer wealth from bondholders to stockholders. Cross sectional analysis also show that bondholder excess returns are affected by financial weakening, corporate reorganizations and takeover defense related terminations.

Pension, health, and welfare funds, Pension Funds & Benefit Plans, Pension Funds, Management, Economic aspects, Capital assets

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