F423bond - FIN 423 Corp Debt Offerings Winter 2008 FIN 423...

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FIN 423 Corp Debt Offerings Winter 2008 (c) Prof. G. William Schwert, 1998-2008 1 FIN 423 -- Selling Corporate Debt Eckbo, (JFE , 1986), Table 1: 723 debt issues from 1964-81 497 industrial (176 firms) 75 convertible issues (all industrials) 226 utilities (40 firms) avg size $158 million Selling Corporate Debt: (1) 479 underwritten, 25 by rights offering (2) Uses of funds: 222 -- capital expenditures 147 -- general funding 252 -- refunding (3) Issue size/Total debt: 6 to 9% (medians) 7 to 15% (means)
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FIN 423 Corp Debt Offerings Winter 2008 (c) Prof. G. William Schwert, 1998-2008 2 Selling Corporate Debt: Announcement Effects (1) No effects on stock prices for straight debt issues Z-tests generally less than 1 in absolute value (2) Effects of convertible debt offer on stock price are negative about 1.5 to 2% drop in stock price Z test about 5 for overall sample Z-test about -5 for overall sample
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This note was uploaded on 03/03/2010 for the course FIN 423 taught by Professor Schwert during the Spring '08 term at Rochester.

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F423bond - FIN 423 Corp Debt Offerings Winter 2008 FIN 423...

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