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Stock Price Reaction to Debt Offerings: The Turkish Evidence

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  • Evrim Akdoğu
  • S. Burcu Avci
  • Serif Aziz Simsir

Abstract

We investigate the valuation effects of debt issues on the issuing firms’ common stock using a sample of Turkish issuers. For the sample of non-financial firms, we find no significant wealth effects for debt issues around the announcement dates. However, market reactions are more positive when information asymmetry between firm managers and outside investors is low, agency costs are high, and when debt issues are likely to carry positive information about firms’ prospects. These results support pecking order, signaling, and agency theories of capital structure. In additional tests, we find positive market reactions to debt issue announcements of financial firms.

Suggested Citation

  • Evrim Akdoğu & S. Burcu Avci & Serif Aziz Simsir, 2021. "Stock Price Reaction to Debt Offerings: The Turkish Evidence," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 57(14), pages 4070-4088, November.
    • Handle: RePEc:mes:emfitr:v:57:y:2021:i:14:p:4070-4088
    DOI: 10.1080/1540496X.2020.1798225
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