INVESTOR REACTION TO NEW ISSUANCES OF U.S. HIGH-YIELD DEBT

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Abstract

This paper investigates firms issuing high-yield debt and the impact on their stock price by identifying determinants of the negative abnormal return that surrounds the announcement of an issue in the short-run. It is learned the length, coupon payment and amount of the issue are significant in explaining the CAR as is the age of the firm, first-time issuers and the marketplace where its stock trades. Firm performance ratios including the current and total-asset-turnover ratio also have explanatory power. These determinants of the CAR have an explanatory power approaching 55%.

Keywords: Stock Price, Debt, Investors, the USA

How to cite this paper: Wolfe, D. R. (2008). Investor reaction to new issuances of U.S. high-yield debt. Corporate Ownership & Control, 5(3-3), 358-384. https://doi.org/10.22495/cocv5i3c3p4