The Performance of Long-run Stock Returns Following Issues of Public and Private Debt
This study uses a balance sheet-based method to identify both public and private debt issues. This feature is important because there have been no studies of the information content of private debt issues, while private debt is substantially more prevalent than public debt. We find no abnormal returns following straight debt issues. However, convertible debt issuers under-perform the market on the order of 50 to 70 percent in the following five years. In pursuit of explanations, we find that convertible debt issues signal a deterioration of future profitability, which accounts for at least part of the stock price underperformance. Copyright Blackwell Publishers Ltd 1999.
Year of publication: |
1999-11
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Authors: | Dichev, Ilia D. ; Piotroski, Joseph D. |
Published in: |
Journal of Business Finance & Accounting. - Wiley Blackwell, ISSN 0306-686X. - Vol. 26.1999-11, 9-10, p. 1103-1132
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Publisher: |
Wiley Blackwell |
Saved in:
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