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Some Evidence on the Uniqueness of Initial Public Debt Offerings

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Listed:
  • Sudip Datta

    (Bentley College,)

  • Mai Iskandar-Datta

    (Suffolk University,)

  • Ajay Patel

    (Wake Forest University)

Abstract

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. Copyright The American Finance Association 2000.

Suggested Citation

  • Sudip Datta & Mai Iskandar-Datta & Ajay Patel, 2000. "Some Evidence on the Uniqueness of Initial Public Debt Offerings," Journal of Finance, American Finance Association, vol. 55(2), pages 715-743, April.
  • Handle: RePEc:bla:jfinan:v:55:y:2000:i:2:p:715-743
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