Announcements Effect of Corporate Bond Issuance and its Determinants

Chin, Sze Kim; Abdullah, Nur Adiana

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Announcements Effect of Corporate Bond Issuance and its Determinants

Contemporary Economics, Vol. 7, No. 1, pp. 5-18, 2013

14 Pages Posted: 18 Apr 2013

See all articles by Sze Kim Chin

Sze Kim Chin

INTI International University College (INTI-UN)

Nur Adiana Abdullah

Universiti Utara Malaysia

Date Written: March 15, 2013

Abstract

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.

Keywords: bond, equity market behavior, event study

JEL Classification: G11, G32, G14

Suggested Citation: Suggested Citation

Chin, Sze Kim and Abdullah, Nur Adiana, Announcements Effect of Corporate Bond Issuance and its Determinants (March 15, 2013). Contemporary Economics, Vol. 7, No. 1, pp. 5-18, 2013 , Available at SSRN: https://ssrn.com/abstract=2253167