The Effects of Capital Structure Change on Security Prices: A Study of Exchange Offers
Year: 1980
Type: preprint
Abstract: This study examines the impact of approximately pure capital structure change announcements on security prices (specifically on common stock, straight preferred stock, convertible preferred stock, straight debt and convertible debt). Statistically significant price adjustments in firms’ common stock, preferred stock and debt related to these announcements are documented and alternative causes for these price changes are examined. The evidence is consistent with both corporate, tax and wealth redistribution effects. There is also evidence that firms make decisions which do not maximize stockholder wealth. In addition, a new approach to testing the significance of public announcements on security returns is presented.
Source: SSRN Electronic Journal
Author: Ronald W. Masulis
Institution: University of California, Los Angeles
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2168803180