Corporate dividends and seasoned equity issues: an empirical investigation

Article Abstract:

This paper investigates whether managers rely on dividends to obtain a higher price in a stock offering and whether the stock price reaction to dividend and offering announcements justifies such a coordination. The evidence does not support either conjuncture. Issuing firms are not more likely to pay or increase dividends than nonissuing forms. Moreover, there is little evidence that firms time stock offering announcements right after dividend declarations to benefit from the attendant information disclosure. The analysis of dividend and stock offering announcement effects suggests few if any benefits from linking dividend and stock offering announcements. (Reprinted by permission of the publisher.)

Prices and rates, Stocks, Dividends, Stock prices

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Debt management under corporate and personal taxation

Article Abstract:

The presence of long-term debt in a corporation's capital structure is shown to give rise to a valuable tax-timing option that can be exercised by the firm on behalf of its shareholders. This option, which is not available if the firm is fully equity financed, implies that leverage will have a positive tax effect on total firm value even if there is no such effect associated with the tax deductibility of the coupon interest payments on debt. The more volatile interest rates and bond prices are, the more valuable the tax-timing option and the larger the favorable impact of debt on shareholder wealth. (Reprinted by permission of the publisher.)

Management, Tax research, Debt financing (Corporations), Debt financing, Financial research

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Bondholder Wealth Effects in Mergers and Acquisitions: New Evidence from the 1980s and 1990s

Article Abstract:

Research shows that negative announcement period returns are earned by acquiring firm bonds, while positive announcement period returns are earned by target bonds below investment grade. Returns are significantly larger for target bonds when the acquirer's rating is above the target's, when the acquirer's maturity is longer than the target's, and when the combination is expected to decrease the target's leverage or risk.

Capital funds & cash flow, Corporate Bonds, Economic aspects, Acquisitions and mergers, Valuation, Return on investment, Rate of return, Bondholders

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