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Inflation persistence and bargained firing costs

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  • Thomas COUDERT

    (LaRGE Research Center, Université de Strasbourg)

Abstract

We study the effect of bank loan and bond announcements on borrower’s stock price. We apply an event study methodology on a sample of companies from 17 European countries. We find that debt announcement generates a positive stock market reaction. However our main conclusion is that the issuance of a loan exerts a significantly higher reaction than the issuance of a bond. This finding supports the hypothesis that loan issuance conveys a positive certification effect. The analysis of the determinants of abnormal returns following debt announcements shows a positive impact of financial development and a negative effect of the Eurozone crisis.

Suggested Citation

  • Thomas COUDERT, 2015. "Inflation persistence and bargained firing costs," Working Papers of LaRGE Research Center 2015-04, Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg.
  • Handle: RePEc:lar:wpaper:2015-04
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    File URL: http://ifs.u-strasbg.fr/large/publications/2015/2015-04.pdf
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    More about this item

    Keywords

    Labor Market Search; Severance Payments; Firing Costs; Wage Bargaining; Business Cycles; Inflation; Monetary Policy Shocks.;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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