Information Effects Associated with Debt-for-Equity and Equity-for-Debt Exchange Offers
This study investigates the information effect caused by a firm's change in capital structure via debt-for-equity and equity-for-debt exchange offers. The evidence suggests that the former transactions lead to abnormal stock price increases, while the latter lead to abnormal stock price decreases. In addition, findings based on analysis of bond returns and cross-sectional regressions do not lend support to the wealth transfer and tax effect hypotheses, but they are consistent with the information effect hypothesis. Copyright 1989 by American Finance Association.
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Volume (Year): 44 (1989)
Issue (Month): 2 (June)
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