Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/212327 
Year of Publication: 
2015
Series/Report no.: 
Bank of Finland Research Discussion Papers No. 19/2015
Publisher: 
Bank of Finland, Helsinki
Abstract: 
We study the effect of bank loan and bond announcements on borrower's stock price. We apply an event study methodology on a sample of companies from 17 European countries and find that debt announcement generates a positive stock market reaction. However, our main conclusion is that the issuance of a loan exerts a significantly stronger reaction than does the issuance of a bond. This finding supports the hypothesis that loan issuance has a positive certification effect. The analysis of determinants of abnormal returns following debt announcements shows a positive impact of financial development and a negative effect of the Eurozone crisis.
JEL: 
G14
G20
Persistent Identifier of the first edition: 
ISBN: 
978-952-323-062-0
Document Type: 
Working Paper

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