The effect of lender identity on a borrowing firm's equity return

Article Abstract:

Previous research demonstrates that a firm's common stock price tends to fall when it issues new public securities. By contrast, commercial bank loans elicit significantly positive borrower returns. This article investigates whether the lender's identity influences the market's reaction to a loan announcement. Although we find no significant difference between the market's response to bank and nonbank loans, we do find that lenders with a higher credit rating are associated with larger abnormal borrower returns. This evidence complements earlier findings that an auditor's or investment banker's perceived "quality" signals valuable information about firm value to uninformed market investors. (Reprinted by permission of the publisher.)

Prices and rates, Stocks, Stock prices, Loans, Debt financing (Corporations), Debt financing

---

From T-bills to common stocks: investigating the generality of intra-week return seasonality

Article Abstract:

The authors investigate the extent to which intra-week seasonality still exists and whether its pattern is uniform across three stock indices and Treasury bonds with seven different maturities. They find that intra-week seasonality continues to be significant and that its pattern is not uniform, either between the stock indices and the Treasury bonds or even among the bonds alone. A pattern shared by stocks and bonds is that Monday returns become increasingly negative with maturity. These findings suggest that neither institutional nor general-equilibrium explanations by themselves can explain the pattern of intra-week seasonality in securities markets. (Reprinted by permission of the publisher.)

Investments, Return on investment, Rate of return, Seasonal variations (Economics)

---

Evidence of bank market discipline in subordinated debenture yields: 1983-1991

Article Abstract:

We examine debenture yields over the period 1983-1991 to evaluate the market's sensitivity to bank-specific risks, and conclude that investors have rationally reflected changes in the government's policy toward absorbing private losses in the event of a bank failure. Although this evidence does not establish that market discipline can effectively control banking firms, it soundly rejects the hypothesis that investors cannot rationally differentiate among the risks undertaken by the major U.S. banking firms. (Reprinted by permission of the publisher.)

Commercial Banks, Commercial Banking, Risk management, Subordinated debentures, Bank failures

Similar abstracts:

• Abstracts: The effect of taxes and depreciation on corporate investment and financial leverage. Tax arbitrage and the existence of equilibrium prices for financial assets
• Abstracts: The presidential election: who pays, wins. Colouring in the president's political face. Reaganomics and the rewriting of history
• Abstracts: The contribution of formal planning to decisions. Reputation and corporate strategy: a review of recent theory and applications
• Abstracts: Taxation enters the age of equality. Business expansion scheme and assured tenancies. A radical, reforming budget
• Abstracts: Is IT necessary for corporate tax? Tax advisers on tenterhooks. Tolley's Tax Cases on Disk: is there a case for IT?

This website is not affiliated with document authors or copyright owners. This page is provided for informational purposes only. Unintentional errors are possible.