The effect of bond deratings on bank stock returns

Article Abstract:

The bonds of nine banks were downgraded in a special issue of Moody's Bond Survey which was published on March 22, 1982, while other bank bonds were listed in the same issue which were not downgraded. An analysis shows that no new information about the companies was given to the stock market by the downgrading, and the bonds which were listed as 'no change' ended the day with positive returns. It is concluded that the special issue had no real effect on the stock market, because the downgradings had been anticipated and the 'no change' rating was ignored.

Management, Statistics, Bank investments, Moody's Investor Service, Bank stocks

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Determinants of stock repurchases by bank holding companies

Article Abstract:

Stock repurchases by bank holding companies (BHCs) can alter the BHC's financial structure significantly. Using a hypothesized group of financial variables, a statistical (logit) model is presented which attempts to account for and analyze the likelihood of a BHC repurchasing its stock. Data used in the study covered the years 1965 to 1983, and it was found that the factors which determine the repurchase probability include: profitability, cash position, and equity capital.

Finance, Stock redemption, Bank holding companies

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