Stock Market Reaction to Debt Financing Arrangements in Russia
Christophe J. Godlewski
LaRGE Research Center (University of Strasbourg); EM Strasbourg Business School; FSESJ - Université de Haute Alsace
affiliation not provided to SSRN
University of Strasbourg - LaRGE Research Center (Laboratoire de Recherche en Gestion et Economie)
Comparative Economic Studies, Vol. 53, Issue 4, pp. 679-693, 2011
This paper investigates stock market reaction to debt arrangements in Russia. The analysis of the valuation of debt arrangements by stock markets provides information about the use of debt by Russian companies. We apply the event study methodology to check whether debt announcements lead to abnormal returns using a sample of Russian listed companies that issued syndicated loans or bonds between June 2004 and December 2008. We find a negative reaction of stock markets to debt arrangements that can be explained by moral hazard behavior of shareholders at the expense of debtholders. Further, we observe no significant difference between announcements of syndicated loans and bonds. Thus, our findings support the view that Russian companies could have incentives to limit their reliance on external debt.
Number of Pages in PDF File: 15Accepted Paper Series
Date posted: December 1, 2011
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