Journal article
Debt-reducing exchange offers
Journal of corporate finance (Amsterdam, Netherlands), Vol.7(2), pp.179-207
06/01/2001
DOI: 10.1016/S0929-1199(01)00019-0
Abstract
Announcements of debt-reducing exchange offers are associated with a negative average stock price reaction. We address two questions: Why do firms undertake debt-reducing exchange offers? And, what is the information conveyed by such offers? The answers are interrelated: Debt-reducing exchange offers are undertaken by financially weak firms in an effort to stave off further financial distress and, thereby, preserve value for shareholders. A successfully completed exchange offer significantly reduces the likelihood that a firm will enter Chapter 11. Announcements of debt-reducing exchange offers apparently contain two pieces of information: (1) the firm is financially weaker than would have been apparent from other publicly available information, and (2) management is attempting to preserve value for shareholders.
Details
- Title: Subtitle
- Debt-reducing exchange offers
- Creators
- Erik Lie - William & MaryHeidi J Lie - William & MaryJohn J McConnell - Purdue University West Lafayette
- Resource Type
- Journal article
- Publication Details
- Journal of corporate finance (Amsterdam, Netherlands), Vol.7(2), pp.179-207
- Publisher
- Elsevier B.V
- DOI
- 10.1016/S0929-1199(01)00019-0
- ISSN
- 0929-1199
- eISSN
- 1872-6313
- Language
- English
- Date published
- 06/01/2001
- Academic Unit
- Finance
- Record Identifier
- 9984380403902771
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