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Student
Title
Supervisor
Faculty
Educational Programme
Final Grade
Year of Graduation
Bashir Luguev
Evaluation of Corporate Bonds Issuance Effect on the Dynamic of the Stock Market: Event Study
Economics
(Bachelor’s programme)
2016
The primary goal of this study is to analyze the price reaction of a firm’s common stock at the issuance of corporate bonds. Event study methodology alongside regression analysis are employed while conducting our research. Abnormal returns are found to be of no significance during the entire 21-day event window. Regression analysis shows no relation between stock price reaction and certain characteristics of both the company and the issue (such as company size, issue size, bond type and financial leverage). The results are similar to those of Eckbo (1986) and Shyam-Sunder (1991), but are not consistent with theoretical implications of Ross (1997), Myers & Majluf (1984), Miller & Rock (1985) and Jensen (1986). In the conclusion we consider possible reasons for such results. We also attempt to give grounds for additional research in the area.

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