We study the impact of 29 management buyouts (MBOs) announced during the years 1981-1989 on the value of the firms outstanding nonconvertible bonds. Using two methodologies-market-adjusted retums and mean-adjusted returns we provide evidence confirming the presence of significant bondholder wealth losses of about 3% associated with the announcement of MBOs. This evidence is in conflict with that provided by Marais, Schipper, and Smith, but is consistent with the results of the recent studies by Asquith and Wizman, and Warga and Welch. The magnitude of the losses in our study is similar to that reported by Asquith and Wizman. For example, the set of our firms which contained no dividend and leverage restrictions experienced an average loss of 6.5%, whereas, for a similar partition, Asquith and Wizman reported an average loss of 5.2%. Our findings are not sensitive to the choice of methodology employed. Furthermore, our findings indicate that bond price reactions are sensitive to the presence of restrictive covenants and maturity.
Download Info
To our knowledge, this item is not available for
download. To find whether it is available, there are three
options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page
whether it is in fact available.
3. Perform a search for a similarly titled item that would be
available.
Publisher Info
Article provided by Financial Management Association in its journal Financial Management.
Contact details of provider: Postal: University of South Florida 4202 E. Fowler Ave. COBA #3331 Tampa, FL 33620 Phone: 813-974-2084 Fax: 813-974-3318 Web page: http://www.fma.org/ More information through EDIRC
For technical questions regarding this item, or to correct its listing, contact: (Courtney Connors).
Related research
Keywords:
Other versions of this item:
Cited by: (explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)