Announcements Effect of Corporate Bond Issuance and Its Determinants
This study aims to investigate the effect of bond issuance announcements and to determine the company characteristics that could influence this effect. The findings reveal positive cumulative average abnormal returns following bond issuances, indicating that the market considers bond offers to be favorable news. Nevertheless, cross-sectional regression analysis shows an insignificant relation of company profitability, growth opportunities, asset tangibility, size, and managerial ownership with cumulative abnormal returns. The results confirm that there is a signaling effect of bond issuance announcements and that this effect is not affected by company characteristics. (original abstract)
- Abdullah, N. A. H. (1999). An empirical investigation of the effect of rights issue announcements on share returns and the determinants of abnormal returns on the Kuala Lumpur Stock Exchange. Unpublished doctoral dissertation, Aston University.
- Abhyankar, A., & Dunning, A. (1999). Wealth effects of convertible bond and convertible preference share issues: An empirical analysis of the UK market. Journal of Banking and Finance, 23(7), 1043-1065.
- Abor, J. (2008). Determinants of the capital structure of Ghanaian firms (AERC Research Paper No. 176). The African Economic Research Conorcium.
- Agrawal, M., Kishore, R., & Rao, H. R. (2006). Market reactions to e-business outsourcing announcements: An event study. Information and Management, 43(7), 861-873.
- Altman, E., Gande, A., & Saunders, A. (2004). Informational efficiency of loans versus bonds: Evidence from secondary market prices (Working Paper No. FIN-04-001). Stern School of Business, New York University.
- Ammann, M., Fehr, M., & Seiz, R. (2006). New evidence on the announcement effect of convertible and exchangeable bonds. Journal of Multinational Financial Management, 16(1), 43-63.
- Arshanapalli, B., Fabozzi, F., Switzer, L.N., & Gosselin, G. (2004). New evidence on the market impact of convertible bond issues in the U.S. (Working paper). Concordia University.
- Bank for International Settlements (2007). Financial stability and local currency bond markets (CGFS paper No. 28). Bank for International Settlements.
- Bank Negara Malaysia (2005). Annual report 2005. Retrieved from http://www.bnm.gov.my
- Bank Negara Malaysia (2006). Annual report 2006. Retrieved from http://www.bnm.gov.my
- Bank Negara Malaysia (2007). Annual report 2007. Retrieved from http://www.bnm.gov.my
- Barclay, M. J., & Smith, C. W. (2005). The capital structure puzzle: The evidence revisited. Journal of Applied Corporate Finance, 17(1), 8-18.
- Barnes, M. L., & Ma, S. (2001). Market efficiency or not? The behavior of China's stock prices in response to the announcement of bonus issues (Discussion paper No. 0120). Adelaide University, Australia.
- Bradley, M., Jarrell, G. A., & Kim, E. H. (1984). On the existence of an optimal capital structure: Theory and evidence. Journal of Finance, 39(3), 857-878.
- Brennan, M., & Kraus, A. (1987). Efficient financing under asymmetric information. Journal of Finance, 42(5), 1225-1243.
- Brennan, M., & Schwartz, E. (1988). The case for convertibles. Journal of Applied Corporate Finance, 1(2), 55-64.
- Brown, E. (1999). Long-run performance analysis of a new sample of UK IPOs (Working Paper August 1999). University of Edinburgh.
- Brown, S. J., & Warner, J. B. (1985). Using daily stock returns, the case of event studies. Journal of Financial Economics, 14(1), 3-31.
- Buferna, F. (2005). Determinants of capital structure: Evidence from Libya (Research paper series No. 2005/08). University of Liverpool.
- Carlsson, P., Holm, O., & Sello, M. (2006). Corporate hybrid capital - Expensive debt or cheap equity? (Unpublished master thesis). School of Business Economics and Law, Goteborg University, Goteborg.
- Charitou, A., Vafeas, N., & Zachariades, C. (2005). Irrational investor response to stock splits in an emerging market. The International Journal of Accounting, 40(2), 133-149.
- Chen, J. J. (2004). Determinants of capital structure of Chinese-listed companies. Journal of Business Research, 57(12), 1341-1351.
- Chen, C., Dong, L., & Wen, M. M. (2005). Backdoor equity financing, firm characteristics, and shareholders' wealth. Center for China Finance & Business Research.
- Davidson, W. N, Glasrock, J. L., & Schwartz, T. V. (1995). Signaling with convertible debt. Journal of Financial & Quantitative Analysis, 30(3), 425-440.
- Denis, D. J., & Mihov, V. T. (2003). The choice among bank debt, non-bank private debt and public debt: Evidence from new corporate borrowings. Journal of Financial Economics, 70(1), 3-28.
- De Haan, L., & Hinloopen, J. (1999). Debt or equity? An empirical study of security issues by Dutch Companies (Research Memorandum WO&E no. 577/9910). De Nederlandsche Bank Econometric Research and Special Studies Department. Retrieved from http://www.dnb.nl/en/binaries/wo0577_tcm47-145906.pdf
- De Roon, F., & Veld, C. (1998). Announcement effects of convertible bond loans and warrant-bond loans: An empirical analysis for the Dutch market. Journal of Banking and Finance, 22(12), 1481-1506.
- Devic, A., & Krstic, M. (2001). Comparable analysis of the capital structure determinants in Polish and Hungarian enterprises - empirical study. Economics and Organization, 1(9), 85-100.
- Dutordoir, M., & De Gucht, L.V. (2004). Why do Western Europe firms issue convertibles instead of straight debt or equity? (ERIM Report Series Reference No. ERS-2006-056-F&A). Columbia University. Retrieved from SSRN: http://ssrn.com/abstract=942151
- Eichengreen, B. (2004). Why doesn't Asia have bigger bond markets? (Working Paper No. 10576). National Bureau of Economic Research.
- Fama, E. F.(1998). Market efficiency, long-term returns, and behavioral finance. Journal of Financial Economics, 49(3), 283-306.
- Ferri, M. G., & Jones, W. H. (1979). Determinants of financial structure: A new methodological approach. Journal of Finance, 34(3), 631-644.
- Gao, Y., & & Tse, Y.K. (2003). Market segmentation and information value of earnings announcements: Some empirical evidence from an event study on the Chinese stock market. (Unpublished working paper).
- Gaud, P., Jani, E., Hoesli, M., & Bender, A. (2005). The capital structure of Swiss companies: An empirical analysis using dynamic panel data. European Financial Management, 11(1), 51-69.
- Gebhardt, W.R., Hvidkjaer, S., & Swaminathan, B. (2005). Stock and bond market interaction: Does momentum spill over? Journal of Financial Economics,75(3), 651-690.
- Green, R. (1984). Investment incentives, debt and warrants. Journal of Financial Economics, 13(1), 115-136.
- Guha, K. B., & Kar, S. (2006). The corporate debt market. A firm-level panel study for India (Research paper No. 2006/50). World Institute for Development Economics Research.
- Hovakimian, A., Opler, T., & Titman, S. (2001). The debt equity choice. Journal of Financial Quantitative Analysis, 36(1), 1-24.
- Hovakimian, A., Hovakimian, G., & Tehranian, H. (2004). Determinants of target capital structure: The case of dual debt and equity issues. Journal of Financial Economics, 71, 517-40.
- Ibrahim, M., & Wong, A. (2005). The corporate bond market in Malaysia (BIS Paper No. 26, February). Bank for International Settlements. Retrieved from http://www.bis.org/publ/bppdf/bispap26p.pdf
- Isachenkova, N., & Mickiewicz, T. (2004). Ownership characteristics and access to finance. Evidence from a survey of large privatized companies in Hungary and Poland (Working Paper No. 666). William Davidson Institute.
- Jensen, M. (1986). Agency costs of free cash flow, corporate finance and takeovers. American Economic Review, 76(2), 323-339.
- Kang, J. K., Kim, Y. C., Park, K. J., & Stulz, R. M. (1995). An analysis of the wealth effects of Japanese offshore dollar-denominated convertible and warrant bond issues. The Journal of Financial and Quantitative Analysis, 30(2), 257-270.
- Kapoor, A. K., & Pope, R. A. (1997). The relationship between corporate debt issuance and changes in systematic risk. Journal of Financial & Strategic Decision, 10(3), 13-22.
- Kim Y. C., & Stulz, R. M. (1992). Is there a global market for convertible bonds? Journal of Business, 65(1), 75-91.
- Kothari, S. P., & Warner, J. B. (2007). Econometrics of event studies. In B. E. Eckbo (Ed.), Handbook of Corporate Finance, (Vol. 1 pp. 3-36). Amsterdam: North Holland Elsevier.
- Lee, J-W., Lee, Y. S., & Lee, B-S. (2000). The determination of corporate debt in Korea. Asian Economic Journal, 14(4), 333-356.
- Lewis, C. M., Rogalski, R. J., & Seward, J. K. (1999). Is convertible debt a substitute for straight debt or for common equity? Financial Management 28(3), 5-27.
- Lewis, C. M., Rogalski, R. J., & Seward, J. K. (2001). The long-run performance of firms that issue convertible debt: An empirical analysis of operating characteristics, analyst forecasts, and risk effects. Journal of Corporate Finance, 7(4), 447-474.
- Lewis, C.M., Rogalski, R.J., & Seward, J.K. (2003). Industry conditions, growth opportunities and market reaction to convertible debt financing decisions. Journal of Banking and Finance, 27(1), 153-181.
- Luengnaruemitchai, P., & Ong, L. L. (2005). An anatomy of corporate bond markets: Growing pains and knowledge gains (Working Paper No. 05/152). International Monetary Fund.
- MacKinlay, A. C. (1997). Event studies in economics and finance. Journal of Economics Literature, 35(1), 13-39.
- Martel, M. C. V., & Padron, Y. G. (2006). Debt and information content: Evidence in the Spanish stock market. International Research Journal of Finance & Economics, Issue 4 (July 2006), 202-208.
- Masulis, R. W. (1983). The impact of capital structure change on firm value: Some estimates. Journal of Finance, 38, 107-126.
- Miller, M., & Rock, K. (1985). Dividend policy under asymmetric information. Journal of Finance, 40(4), 1031-1051.
- Modigliani, M., & Miller, M. (1958). The cost of capital, corporation finance and the theory of investment. The American Economic Review, 48(3), 261-297.
- Modigliani, M., & Miller, M. (1963). Corporate income taxes and the cost of capital: A correction. American Economic Review, 53(3), 433-443.
- Mollemans, M. (2002). The convertible bond announcement effect in Japan (Working paper No. 1f). Macquarie University, Sydney, Australia.
- Myers, S., & Majluf, N. (1984). Corporate financing and investment decisions when firms have information that investors do not have. Journal of Financial Economics, 13(2), 187-222.
- Navarrete, A. F. (2001). The role of the corporate bond market in Mexico as a source of financing. Paper presented at conference on Financial Markets in Mexico, Center for Research on Economic Development and Policy Reform, Stanford University, October 3-6, 2001, Stanford, CA.
- Pandey, I. M. (2004). Capital structure, profitability and market structure: Evidence from Malaysia. Asia Pacific Journal of Economics & Business, 8(2), 78-91.
- Rajan, R. G., & Zingales, L. (1995). What do we know about capital structure? Some evidence from international data. Journal of Finance, 50(5), 1421-1460.
- Ross, S. A. (1977). The determination of financial structure: The incentive-signaling approach. Bell Journal of Economics, 8(1), 23-40.
- Schramade, W. (2005). Bond market entry and agency costs of equity [draft]. RSM Erasmus University, The Netherlands.
- Soongswang, A. (2007). An investigation of tender offer effects on Thai target firms during the bid period. International Research Journal of Finance & Economics, Issue 9 (2007), 88-104.
- Stein, J. C. (1992). Convertible bonds as backdoor equity financing. Journal of Financial Economics, 32(1), 3-21.
- Titman, S., & Wessel, R. (1988). The determinants of capital structure choice. Journal of Finance, 43(1), 1-19.
- Wiwattanakantang, Y. (1999). An empirical study on the determinants of the capital structure of Thai firms. Pacific-Basin Finance Journal, 7(3-4), 371-403.