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Some Evidence on the Uniqueness of Initial Public Debt Offerings
Author(s) -
Datta Sudip,
IskandarDatta Mai,
Patel Ajay
Publication year - 2000
Publication title -
the journal of finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 18.151
H-Index - 299
eISSN - 1540-6261
pISSN - 0022-1082
DOI - 10.1111/0022-1082.00224
Subject(s) - initial public offering , debt , debt levels and flows , internal debt , equity value , monetary economics , business , maturity (psychological) , information asymmetry , stock (firearms) , debt to gdp ratio , stock price , gearing ratio , equity (law) , financial system , economics , finance , mechanical engineering , psychology , developmental psychology , paleontology , series (stratigraphy) , political science , law , biology , engineering
Debt initial public offerings (IPOs) represent a major shift in a firm's financing policy by both extending debt maturity and altering the public‐private debt mix. In contrast to findings for seasoned debt offerings, we document a significantly negative stock price response to debt IPO announcements. This result is consistent with debt maturity and debt ownership structure theories. The equity wealth effect is negatively related to the offer's maturity, and positively related to the degree of bank monitoring. We find that firms with less information asymmetry and firms with higher growth opportunities experience a less adverse stock price response.