Hostname: page-component-78c5997874-g7gxr Total loading time: 0 Render date: 2024-11-15T07:59:48.317Z Has data issue: false hasContentIssue false
  • English
  • Français

Valuation Effects of Cancelled Debt Offerings

Published online by Cambridge University Press:  06 April 2009

Marlin R. H. Jensen  and
William N. Pugh
Get access Rights & Permissions [Opens in a new window]

Abstract

We examine the price behavior of the firm's common stock associated with cancelled straight debt offerings. Excluding utilities, we find negative excess returns associated with offering and cancellation announcements. Further, the stronger withdrawal reactions we find, when the funds were to be used for capital expenditures, may signal a decline in profitable investment opportunities. These results are consistent with Miller and Rock's (1985) hypothesis.

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , Volume 26 , Issue 3 , September 1991 , pp. 425 - 431
Copyright
Copyright © School of Business Administration, University of Washington 1991

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Asquith, P., and Mullins, D.. “Equity Issues and Offering Dilution.” Journal of Financial Economics, 15 (01/02 1986a), 61–89.CrossRefGoogle Scholar
Asquith, P., and Mullins, D.. “Signalling with Dividends, Stock Repurchases, and Equity Issues.” Financial Management, 15 (Autumn 1986b), 27–44.CrossRefGoogle Scholar
Dann, L., and Mikkelson, W.. “Convertible Debt Issuance, Capital Structure Change and Financing-Related Information: Some New Evidence.” Journal of Financial Economics, 13 (06 1984), 157–186.CrossRefGoogle Scholar
Eckbo, E. “Valuation Effects of Corporate Debt Offerings.” Journal of Financial Economics, 15 (01/02 1986), 119–151.CrossRefGoogle Scholar
Eckbo, E., and Masulis, R.. “Adverse Selection and the Equity Flotation Method.” Unpubl. Manuscript, Univ. of British Columbia, Vancouver, Canada (09 1990).Google Scholar
Kolodny, R., and Suhler, D.. “Changes in Capital Structure, New Equity Issues, and Scale Effects.” Journal of Financial Research, 8 (Summer 1985), 127–136.CrossRefGoogle Scholar
Linn, S., and Pinegar, M.. “The Effect of Issuing Preferred Stock on Common and Preferred Stockholder Wealth.” Journal of Financial Economics, 22 (10 1988), 155–184.CrossRefGoogle Scholar
Masulis, R., and Korwar, A.. “Seasoned Equity Offerings: An Empirical Investigation.” Journal of Financial Economics, 15 (01/02 1986), 91–118.CrossRefGoogle Scholar
McConnell, J., and Muscarella, C.. “Corporate Capital Expenditure Decisions and the Market Value of the Firm.” Journal of Financial Economics, 14 (09 1985), 399–422.CrossRefGoogle Scholar
Mikkelson, W., and Partch, M.. “Valuation Effects of Security Offerings and the Issuance Process.” Journal of Financial Economics, 15 (01/02 1986), 31–60.CrossRefGoogle Scholar
Mikkelson, W., and Partch, M.. “Withdrawn Security Offerings.” Journal of Financial and Quantitative Analysis, 23 (06 1988), 119–133.CrossRefGoogle Scholar
Miller, M., and Rock, K.. “Dividend Policy under Asymmetric Information.” Journal of Finance, 40 (09 1985), 1031–1051.CrossRefGoogle Scholar
Myers, S., and Majluf, N.. “Corporate Financing and Investment Decisions when Firms Have Information that Investors Do Not Have.” Journal of Financial Economics, 13 (06 1984), 187–221.CrossRefGoogle Scholar
Officer, D., and Smith, R.. “Announcement Effects of Withdrawn Security Offerings: Evidence on the Wealth Redistribution Hypothesis.” Journal of Financial Research, 9 (Fall 1986), 229–238.CrossRefGoogle Scholar
Schipper, K., and Smith, A.. “A Comparison of Equity Carve-Outs and Seasoned Equity Offerings: Share Price Effects and Corporate Restructuring.” Journal of Financial Economics, 15 (01/02 1986), 153–186.CrossRefGoogle Scholar
Smith, C. “Investment Banking and the Capital Acquisition Process.” Journal of Financial Economics, 15 (01/02 1986), 3–29.CrossRefGoogle Scholar