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The Market Reaction To Straight Debt Issues: The Effects Of Free Cash Flow

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  • Shawn D. Howton
  • Shelly W. Howton
  • Steven B. Perfect

Abstract

In this paper we measure the market reaction to 937 straight debt issues between 1983 and 1993. We find a negative and significant market reaction to a straight debt announcement. In addition, we find that the market reaction to a straight debt issue is directly related to the issuing firm's level of existing cash and inversely related to the issuing firm's investment opportunities.

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  • Shawn D. Howton & Shelly W. Howton & Steven B. Perfect, 1998. "The Market Reaction To Straight Debt Issues: The Effects Of Free Cash Flow," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 21(2), pages 219-228, June.
    • Handle: RePEc:bla:jfnres:v:21:y:1998:i:2:p:219-228
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    File URL: http://hdl.handle.net/10.1111/j.1475-6803.1998.tb00681.x
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    References listed on IDEAS

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