The Long-Run Performance of Firms Issuing Bonds

Jewell, Jeff; Livingston, Miles

doi:10.3905/jfi.1997.408211

Cited by 13 publications

(6 citation statements)

References 9 publications

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“…Cheng (1995) and Jung et al (1995) "nd positive, but statistically insigni"cant, average long-run returns. Jewell and Livingston (1997) likewise "nd no evidence of underperformance in the three years following straight debt o!erings for most classes of debt issues (the exception being 68 B-rated issues which have signi"cant underperformance). All three of these studies, however, use some form of cumulative abnormal return metric, and Lyon et al (1998) show that such metrics can lead to biased test statistics.…”

Section: Introductionmentioning

confidence: 90%

The Long-run Performance of Stock Returns Following Debt Offerings

1997

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Section: Introductionmentioning

confidence: 90%

The Long-run Performance of Stock Returns Following Debt Offerings

1997

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“…However, there is disagreement about the long-run performance of straight debt issues. Jewell and Livingston (1997) find no abnormal returns for straight bonds (except for B-rated bonds where they find underperformance). In contrast, Spiess and Affleck-Graves (1999) find a 5-year post-issue underperformance on the magnitude of 20 percent.…”

mentioning

confidence: 94%

“…Several recent papers also investigate the long-run stock returns following debt issues (Jewell and Livingston, 1997;Lee and Loughran, 1998;and Spiess and Affleck-Graves, 1999). In considering the combined evidence, we find substantial agreement about the results for convertible debt: Lee and Loughran (1998) and Spiess and Affleck-Graves (1999) also document a statistically significant and economically large underperformance following convertible debt issues.…”

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confidence: 99%

The Performance of Long‐run Stock Returns Following Issues of Public and Private Debt

Dichev

Piotroski

1999

Business Fin & Account

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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.

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“…Spiess and Affleck-Graves (1999) observe a long-run underperformance of stock returns following the issue of both straight and convertible debt. However, there is also evidence of a long-run performance not different from zero for straight debt issuing companies (Dichev and Piotrosky, 1999;Jewell and Livingston, 1997). More recently, Davydov et al (2014) as well as Godlewski et al (2011) also find evidence of negative cumulative average abnormal returns (CAARs) following straight bond issues for a sample of Russian firms.…”

Section: Introductionmentioning

confidence: 95%

The performance of corporate bond issuers in times of financial crisis: empirical evidence from Latin America

Berninger

Fiesenig

Schiereck

2021

JRF

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PurposeThe fundamental theory of Modigliani and Miller (1958) states that a firm's financing decisions are independent from the firm's value. Nevertheless, several empirical studies as well as theoretical approaches from the past decade impugn this relation for real markets with their immanent inefficiencies. However, these questions are rather than academic in nature: Especially the influence of macroeconomic conditions on the market perception of debt issues is from high economic importance, since the need for new liquidity usually becomes even more urgent when the economic conditions worsen.Design/methodology/approachThis paper analyzes the reaction of shareholders to the issue of debt by Latin American firms under special consideration of the macroeconomic sentiment. To do so, a sample of debt issued by Latin American companies between 2003 and 2010 is empirically examined through an event study.FindingsThe authors empirically demonstrate that specifically in Latin America, debt issuing companies show a significant underperformance during recessionary periods and an overperformance during nonrecessionary periods. These findings differ from previous results for mature capital markets. The authors conclude that not only the overall economic conditions matter to explain stock market reactions on bond issues but also the maturity of the corporate debt market plays an important role.Originality/valueThe authors provide first evidence that the previously described changes in the returns on specific stocks depending on the economic sentiment (Baker and Wurgler, 2006) are under certain conditions also present in the market for corporate debt.

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The Long-Run Performance of Firms Issuing Bonds

Cited by 13 publications

References 9 publications

The Long-run Performance of Stock Returns Following Debt Offerings

The Long-run Performance of Stock Returns Following Debt Offerings

The Performance of Long‐run Stock Returns Following Issues of Public and Private Debt

The performance of corporate bond issuers in times of financial crisis: empirical evidence from Latin America

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