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Valuation Effects of Cancelled Debt Offerings

Published online by Cambridge University Press:  06 April 2009

Marlin R. H. Jensen  and
William N. Pugh
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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

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