Stock market reaction to debt financing arrangements in Russia
This paper investigates stock market reaction to debt arrangements in Russia. The analysis of the valuation of debt arrangements by stock markets provides information about the use of debt by Russian companies. We apply the event study methodology to check whether debt announcements lead to abnormal returns using a sample of Russian listed companies that issued syndicated loans or bonds between June 2004 and December 2008. We find a negative reaction of stock markets to debt arrangements that can be explained by moral hazard behavior of shareholders at the expense of debtholders. Further, we observe no significant difference between announcements of syndicated loans and bonds. Thus, our findings support the view that Russian companies could have incentives to limit their reliance on external debt.
|Date of creation:||25 Aug 2010|
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- Fungacova, Zuzana & Godlewski, Christophe J. & Weill, Laurent, 2009.
"Asymmetric Information and Loan Spreads in Russia: Evidence from Syndicated Loans,"
BOFIT Discussion Papers
7/2009, Bank of Finland, Institute for Economies in Transition.
- Zuzana Fungacova & Christophe J. Godlewski & Laurent Weill, 2009. "Asymmetric Information and Loan Spreads in Russia: Evidence from Syndicated Loans," Working Papers of LaRGE Research Center 2009-01, Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg.
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