Debt Issuances, Capital Structure Changes and Stock Return Performance

Debt financing is a major source of corporate financing in many emerging countries including Malaysia. However, the knowledge on shareholders wealth created from debt financing decision and sources of the wealth creation is scant and inconclusive. The scarcity of literature is more noticeable in eme...

Full description

Saved in:

Bibliographic Details
Main Author:	Uddin, Md. Mohan
Format:	Thesis
Language:	eng eng
Published:	2012
Subjects:	HG Finance
Online Access:	https://etd.uum.edu.my/3452/1/MD.%20MOHAN%20UDDIN.pdf https://etd.uum.edu.my/3452/7/mohan.pdf
Tags:	Add Tag No Tags, Be the first to tag this record!

id	my-uum-etd.3452
record_format	uketd_dc
institution	Universiti Utara Malaysia
collection	UUM ETD
language	eng eng
advisor	Ibrahim, Yusnidah
topic	HG Finance
spellingShingle	HG Finance Uddin, Md. Mohan Debt Issuances, Capital Structure Changes and Stock Return Performance
description	Debt financing is a major source of corporate financing in many emerging countries including Malaysia. However, the knowledge on shareholders wealth created from debt financing decision and sources of the wealth creation is scant and inconclusive. The scarcity of literature is more noticeable in emerging market environment and market where Islamic debt securities coexist with conventional debt securities. In response to this knowledge gap, this study attempts to examine the short and long run stock return performance of debt security issuers as well as the determinants of the long run stock return performance. Samples of 136, 165, 145, and 126 bond issues during January 2001 to October 2009 are used for analyzing short run announcement effects, as well as one, two, and three year performance, respectively. Using event study method, this study finds that the shareholders of bond-issuing firm experience significantly positive wealth creation around the announcement of the issues. Value weighted average of cumulative abnormal return and buy and hold abnormal return of the portfolio of debt issuers as well as the intercept of Fama-French three factor model is used for estimating the long run performance. The significance of buy and hold return is tested by implementing bootstrapped skewness adjusted, and heteroscedasticity and serial correlation consistent t-statistics. Results show that the shareholders of bond issuing firms experience significant long run performance in three-year period after the issue. Among the significant determinants, capital structure change, growth opportunity, and ownership concentration influence long run performance positively. The effects of growth opportunity and ownership concentration are significantly moderated by capital structure changes. Some variables only affect the long run performance when the debt issuance is associated with capital structure change. Among them, choice of Islamic debt, debt tax shield. and free cash flow which influence the long run performance negatively, while firm size influences positively. As a whole, this study finds evidence for partial applicability of trade off and agency costs theory in explaining long run wealth creation by the debt financing decision in Malaysia. The results of this study indicate that large companies and high ownership concentration companies should issue debts for meeting their financial requirement. Large companies can enjoy the benefits of issuing debts, such as interest tax saving, without facing severe financial distress costs, while high ownership concentration companies that issue debts can retain control on the companies' activities and overcome usage of free cash flows for private benefits.
format	Thesis
qualification_name	Ph.D.
qualification_level	Doctorate
author	Uddin, Md. Mohan
author_facet	Uddin, Md. Mohan
author_sort	Uddin, Md. Mohan
title	Debt Issuances, Capital Structure Changes and Stock Return Performance
title_short	Debt Issuances, Capital Structure Changes and Stock Return Performance
title_full	Debt Issuances, Capital Structure Changes and Stock Return Performance
title_fullStr	Debt Issuances, Capital Structure Changes and Stock Return Performance
title_full_unstemmed	Debt Issuances, Capital Structure Changes and Stock Return Performance
title_sort	debt issuances, capital structure changes and stock return performance
granting_institution	Universiti Utara Malaysia
granting_department	Othman Yeop Abdullah Graduate School of Business
publishDate	2012
url	https://etd.uum.edu.my/3452/1/MD.%20MOHAN%20UDDIN.pdf https://etd.uum.edu.my/3452/7/mohan.pdf
_version_	1747827574909698048
spelling	my-uum-etd.34522016-04-20T07:33:37Z Debt Issuances, Capital Structure Changes and Stock Return Performance 2012 Uddin, Md. Mohan Ibrahim, Yusnidah Othman Yeop Abdullah Graduate School of Business Othman Yeop Abdullah Graduate School of Business HG Finance Debt financing is a major source of corporate financing in many emerging countries including Malaysia. However, the knowledge on shareholders wealth created from debt financing decision and sources of the wealth creation is scant and inconclusive. The scarcity of literature is more noticeable in emerging market environment and market where Islamic debt securities coexist with conventional debt securities. In response to this knowledge gap, this study attempts to examine the short and long run stock return performance of debt security issuers as well as the determinants of the long run stock return performance. Samples of 136, 165, 145, and 126 bond issues during January 2001 to October 2009 are used for analyzing short run announcement effects, as well as one, two, and three year performance, respectively. Using event study method, this study finds that the shareholders of bond-issuing firm experience significantly positive wealth creation around the announcement of the issues. Value weighted average of cumulative abnormal return and buy and hold abnormal return of the portfolio of debt issuers as well as the intercept of Fama-French three factor model is used for estimating the long run performance. The significance of buy and hold return is tested by implementing bootstrapped skewness adjusted, and heteroscedasticity and serial correlation consistent t-statistics. Results show that the shareholders of bond issuing firms experience significant long run performance in three-year period after the issue. Among the significant determinants, capital structure change, growth opportunity, and ownership concentration influence long run performance positively. The effects of growth opportunity and ownership concentration are significantly moderated by capital structure changes. Some variables only affect the long run performance when the debt issuance is associated with capital structure change. Among them, choice of Islamic debt, debt tax shield. and free cash flow which influence the long run performance negatively, while firm size influences positively. As a whole, this study finds evidence for partial applicability of trade off and agency costs theory in explaining long run wealth creation by the debt financing decision in Malaysia. The results of this study indicate that large companies and high ownership concentration companies should issue debts for meeting their financial requirement. Large companies can enjoy the benefits of issuing debts, such as interest tax saving, without facing severe financial distress costs, while high ownership concentration companies that issue debts can retain control on the companies' activities and overcome usage of free cash flows for private benefits. 2012 Thesis https://etd.uum.edu.my/3452/ https://etd.uum.edu.my/3452/1/MD.%20MOHAN%20UDDIN.pdf text eng validuser https://etd.uum.edu.my/3452/7/mohan.pdf text eng public Ph.D. doctoral Universiti Utara Malaysia A Brief Profile of Bond Market. (2008). Retrieved January 29, 2010, from http://bondinfo.bnm.gov.my/portal/server.pt? open=514&objID=27275&parentname=MyPage&parentid=1&mode=2&in_hi_userid=22874&cached=true Abhyankar, A., & Dunning, A. (1999). Wealth effects of convertible bond and convertible preference share issues: An empirical analysis of the UK market. Journal of Banking & Finance, 23(7), 043-1065. Abhyankar, A., & Ho, K. (2006). Long-run abnormal performance following convertible preference share and convertible bond issues: New evidence from the United Kingdom. International Review of Economics and Finance, 15, 97-119. Adnan, M. A., & Muhamad (2007). Agency problems in mudarabah financing: the case of sharia (rural) banks, Indonesia. IIUM Journal of Economics and Management, 15(2), 219-243. Agarwal, S., Liu, C., & Rhee, S. G. (2008). Investor demand for IPOs and aftermarket performance: Evidence from the Hong Kong stock market. International Financial Markets, Institutions and Money, 18, 176-190. Ahmed, H. J. A., & Hisham, N. (2009). Revisiting capital structure theory: a test of pecking order and static order trade-off model from Malaysian capital market. International Research Journal of Finance and Economics, 30, 58-65. Akhigbe, A. E., Petitt, J. C., & Richardson, R. (1997). Wealth effects of corporate debt issues: Thceimpact of issuer's motivations. Financial Managemen, 26(1), 32-47. Alti, A. (2006). How persistent is the impact of market timing on capital structure?. Journal of Finance, 61, 1681- 1710. Ammann, M., Fehr, M. & Steiz, R. (2006). New evidence on the announcement effect of convertible and exchangeable bonds. Journal of Multinational Financial Management, 16(1), 43-63. Ang, J., Chua, J., & McConnell, J. (1982). The administrative costs of corporate bankruptcy: A note. The Journal of Finance, 37 (1), 219-226. Ang, J. S., & S. Zhang, (2002). Choosing benchmarks and test statistics for long horizon event study. Available: http://ssrn.com/abstract =303803 Anonynous. (2009). Tax guidelines boost Islamic finance in France. International Tax Review, London: May 2009. Retrieved December 08, 2009, from http://proquest.umi.com.eserv.uum.edu.my/pqdweb?did=l74482411&sid=4 &Fmt=3&clientId=28929&RQT=309&VName=PQD Antweiler, W., & Frank, M. Z. (2006). Do U.S. stock markets typically overreact to corporate news stories?. working paper, UBC and University of Minnesota Arshanapalli, B., Fabozzi, F., Switzer, L. N., & Gosselin, G. (2004). New evidence on the market impact of convertible bond issues in U.S. Paper presented at annual meeting of the California. Ashhari, Z. M., Chun, L. S., & Nassir, A. M. (2009). Conventional vs Islamic Bond announcements: The effects on shareholders' wealth. International Journal of Business and Management, 4(6), 105- 111. Autore, D. M., Bray, D. E., & Peterson, D. R. (2009). Intended use of proceeds and the long-run performance of seasoned equity issuers. Journal of Corporate Finance, 15, 358-367. Bacha, O. I., Zaui, S. R. S. M., Rasid, M. E. S. M., & Mohamad, A. (2009). Granting employee stock options (ESOS), market reaction and financia1 performance. Asian Academy of Management Journal of Accounting and Finance, 5(T), 117-138. Baker, M., & Wurgler, J. (2002). Market timing and capital structure. Journal of Finance, 57(1), 1-32. Bank Negara Malaysia. (2008). Annual Report. Bank Negara Malaysia (2010). Quarterly bulletin, Retrieved May 14, 2011, from http://www.bnm.gov.my/files/publication/qb/2010/Q4/p4.pdf Barber, B. M., & Lyon, J. D. (1997). Detecting long-run abnormal stock returns: the empirical power and specification of test statistics. Journal of Financial Economics, 43,341-72. Barberis, N., Shleifer, A., & Vishny, R. (1998). A model of investor sentiment. Journal of Financial Economics, 49, 307-343. Baxter, N. (1967). Leverage, risk of ruin, and the cost of capital. Journal of Finance 22(3), 395 - 404. Bayless, M., & Jay, N. (2008). A multiperiod evaluation of returns following seasoned equity offerings. Journal of Economics and Business, 60,291-311. Bekaert, G., & Harvey, C. R. (2003). Emerging markets finance. Journal of Empirical Finance, 10, 3 - 55. Bena, J., & Hanousek, J. (2008). Rent extraction by large shareholders: Evidence using dividend policy in thc Czech Republic. Czech Journal of Economics and Finance, 58(3)&(4), 106-130. Bennett, M., & Donnelly, R. (1993). The determinants of capital structure: some UK evidence. British Accounting Review, 25, 43-59. Bessler, W., &: Thies, S. (2007). The long-run performance of initial public offerings in Germany. Managerial Finance, 33(6), 420-441. Bevan, A. A., & Danbolt, J. (2004) Testing for inconsistencies in the estimation of uk capital structure determinants. Applied Financial Economics, 14 (1), 55-66. Bharath, S. T., Pasquariello, P., & Wu, G. (2009). Does asymmetric information drive capital structure decisions?. Review of Financial Studies, 22(8), 3211-3243. Bierman, H., & Thomas, J. (1972). Ruin considerations and debt issuance. Journal of Financial und Quantitative Analysis, 7(1), 1361 - 1378. Boehme, R. D, Danielsen, B. R., Kumar, P., & Sorescu, S. M. (2009). Idiosyncratic risk and the cross-section of stock returns: Merton (1987) meets Miller (1977). Journal of Financial Markets, 12(3), 438-468. Brav, A. (2000). Inference in long-horizon event studies: A Bayesian approach with application to initial public offerings. Journal of Finance, 55, 1979-2016. Brav, A. & Gompers, P. A., (1997). Myth or reality? The long-run underperformance of initial public offerings: Evidence from venture and nonventure capital-backed companies. Journal of Finance, 52, 1791-1821. Brennan, M. J., & Schwartz, E. S. (1984). Optimal financial policy and firm valuation. Journal of Finance, 39,593-607. Brounen, D., de Jong, A., & Koedijk, K. (2006). Capital structure policies in Europe: Survey evidence. Journal of Banking & Finance, 30(5), 1409-1442. Brown, E. (2004). Long-run performance analysis of a new sample of UK IPOs. ESE Discussion Papers, 41. Edinburgh School of Economics, University of Edinburgh. Retrieved May 25, 2011, from http://www.econ.ed.ac.uk/papers/ipo.pdf Brown, P., Gallery, G., & Goei, O. (2006). Does market misvaluation help explain share market long-run underperformance following a seasoned equity issue?. Accounting and Finance, 46, 191-219. Burlacu, R. (2000). New evidence on the pecking order hypothesis: The case of French convertible bonds. Journal of Multinational Financial Management, 10, 439-459. Cai, X., Liu, G. S., & Mase, B. (2008). The long-run performance of initial public offerings and its determinants: the case of China. Review of Quantitative Finance and Accounting, 30, 419-432. Campbell, J. Y., Hilscher, J., & Szilagyi, J. (2010). Predicting Financial Distress and the Performance of Distressed Stocks. Journal of Investment Management, forthcoming. Campello, M. (2006). Debt financing: does it boost or hurt firm performance in product markets. Journal of Financial Economics, 82, 135-172. Carhart, M. M. (1997). On persistence in mutual fund performance. .Journal of Finance, 52, 57-82. Carpentier, C. (2006). The valuation effects of long-term changes in capital structure. International Journal of Managerial Finance, 2(1), 4-18. Chan, E., Ahmad, M. H., & Wooldridge, P. (2007). Liquidity in an emerging bond market: a case study of corporate bonds in Malaysia. Conference on "Bond market developments in a comparative perspective: Asia, Europe, Latin America" organized by the HKIMR, BIS and CEPR. Chan, K., Ikenberry, D., & Lee, I. (2004). Economic sources of gain in stock repurchases. Journal of Financia1 and Quantitative Analysis, 39(3),461-479. Chan, K. C., & Chen, N. (1991). Structural and return characteristics of small and large firms. Journal of Finance 46, 1467-1484. Chaplinsky, S. & Hansen, R. S. (1993). Partial anticipation, the flow of information and the economic impact on corporate debt sales. Review of Financial Studies, 6(3), 709-32. Cheong, W. C., & Isa, Z. (2009). Structural break unit-root tests: An empirical study of Malaysian equity markets. Sains Malaysiana, 38(5), 699-705. Choe, H., Masulis, R. W., & Nanda, V. K. (1993). Common stock offerings across the business cycle: Theory and evidence. Journal of Empirical Finance,l(l), 3-31. Chou, D, Gombola, M., & Liu, F. (2009). Long-run underperformance following private equity placements: The role of growth opportunities. The Quarterly Review of Economics and Finance, 49, 1113-1128. Chou, D, Wang, C. E., Chen, S., & Tsai, S. (2009). Earnings management and the long-run underperformance of firms following convertible bond offers. Journal of Business Finance & Accounting, 36(1) & (2), 73-98. Clarke, J., Dunbar, C., & Kahle, K. M. (2001). Long-run performance and insider trading in completed and canceled seasoned equity offerings. Journal of Financial and Quantitative Analysis, 36(4), 415-430. Coakley, J., Hadass, L., & Wood, A. (2008). Hot IPOs can damage your long-run wealth!. Applied Financial Economics, 18, 1111-1120. Cook, D. O., & Tang, T. (2010). Macroeconomic conditions and capital structure adjustment speed. Journal of Corporate Finance, 16(1), 73-87. Corhay, A., Teo, S., & Tourani-Rad, A. (2002). The long run performance of Malaysian initial public offerings (IPOs): value and growth effects. Managerial Finance, 28(2), 52-65. Cronqvist, H., Makhija, A. K., & Yonker, S. E. (2009) What does CEOs' personal leverage tell us about corporate leverage?. Fisher College of Business Working Paper Series. WP 2009-03-004. Da Silva Rosa, R., Velayuthen. G., & Walter, T. (2003). The share market performance of Australian venture capital-backed and non-venture capitalbacked IPOs. Pacific-Basin Finance Journal, 11 (2), 197-218. Daniel, K., Hirshleifer, D., & Subrahmanyam, A. (1998). Investor psychology and security market under- and overreactions. Journal of Finance, 53, 1839-1885. Dann, L. Y., & Mikkelson, W. H., (1984). Convertible debt issuance, capital structure change and financing-related information: Some new evidence. Journal of Financial Economics, 13(2), 157-186. Datta, S., Iskandar-Datta, M., & Patel, A. (2000). Some evidence on the uniqueness of initial public debt offerings. Journal of Finance, 55(2), 715-743. Datta, S., Iskandar-Datta, M., & Raman, K. (2000). Debt structure adjustments and long-run stock price performance. Journal of Financial Intermediation, 9, 427-453. DeAngelo, H., & Masulis, R.W. (1980). Optimal capital structure under corporate and personal taxation. Journal of Financial Economics, 8, 3-29. Deesomsak, R., Paudyal, K., & Pescetto, G. (2004). The determinants of capital structure: evidence from Asia Pacific region. Journal of Multinational Financial Management, 14, 387-405. Denis, D. K., & McConnell, J. J. (2003). International corporate governance. Journal of Financial and Quantitative Analysis, 38(1), 1-36. Dhnadirek, R., & Tang, J. (2003). Corporate governance problems in Thailand: Is ownership concentration the cause?. Asia Pasific Business Review, 10(2), 121-138. Dichev, I. D., & Piotroski, J. D. (1999). The performance of long-run stock returns following issues of public and private debt. Journal qof Business Finance & Accounting, 26(9) & (l0), 1103-1132. Dittmar, A. K., & Dittmar, R. F. (2008). The timing of financing decisions: An examination of the correlation in financing waves. Journal of Financial Economics, 90(1), 59-83. Dittmar, A., & Thakor, A. (2007). Why do firms issue equity?. Journal of Finance, 62(1), 1- 54. Donaldson, G., (1961). Corporate debt capacity: A study of corporate debt policy and the determination of corporate debt capacity. Boston. Division of Research, Harvard Graduate School of Business Administration. Cited in Myers (1984). Drew,. M. E., & Veeraraghavan, M. (2002). A closer look at the size and value premium in emerging markets: evidence from the Kuala Lumpur Stock Exchange. Asian Economic Journal, 16(4), 337-51. Driffield, N., & Pal, S. (2010). Evolution of capital structure in East Asia--corporate inertia or endeavours?. Journal of the Royal Statistical Society A, 173, 1-29. Drobetz, W., Kammermann, M., & Walchli, U. (2005). Long-run performance of initial public offerings: the evidence for Switzerland. Schmalenbach Business Review, 57(3), 253-275. Dutta, S., & Jog, V. (2009). The long term performance of acquiring firms: A reexamination of an anomaly. Journa1 of Banking & Finance, 33(8), 1400-1412. Earle, J. S., Kucsera, C., & Telegdy, A. (2005). Ownership concentration and corporate performance on the Budapest Stock Exchange: Do too many cooks spoil the goulash?. Corporate Governance: An International Review, 13(2), 254-264. Eckbo, B. E. (1986). Valuation effects of corporate debt offerings. Journal of Financial Economics, 15, 119-51. Eckbo, B.E., & Norli, O. (2004). The choice of seasoned-equity selling mechanisms: Theory and evidence. Dartmouth, Working paper. Eldorniaty, T. I., & Azim, M. H. (2008). The dynamics of capital structure and heterogeneous systematic risk classes in Egypt. International Journal of Emerging Markets, 3(1), 7-37. Espenlaub, S., Gregory, A., & Tonks, I., (2000). Re-assessing the long-term underperformance of UK initial public offerings. European Financial Management, 6(3), 319-324. Fama, E. F. (1998). Market efficiency, long-term returns, and behavioral finance. Journal of Financial Economics, 49(3), 283-306. Fama, E. F., Fisher, L., Jensen, M., & Roll, R. (1969). Thc adjustment of stock prices to new information. International Economic Review, 10, 1-21. Fama, E. F., & French, K. R. (1993). Common risk factors in the returns on bonds and stocks. Journal of Financial Economics, 33(1), 3-56. Fama, E. F., & French, K. R. (1998). Value versus growth: The international evidence. Journal of Finance, 53, 1975-1999. Fama, E. F., & French, K. R. (2002). Testing trade-off and pecking order predictions about dividends and debt. Review of Financial Studies, 15, 1-33. Farhat, J., Cotei, C., & Abugri, B. A. (2006). The pecking order hypothesis vs. the static trade-off theory under different institutional environments. preliminary draft, p . 39, Retrieved from http://wehner.tamu.edu/finc.www/seminar/ papers/CovFinance31Jan2007.pdf Farinos, J. E., Garcia, C. J., & Ibanez, M. (2007). 1s the long-run underperformance of seasoned equity issues irrational? Evidence from Spain. International Review of Financial Analysis, 16, 183-199. Ferri, M. G., & Jones, W. H. (1979). Determinants of financial structure: A new methodological approach. The Journal of Finance, 34 (3), 631-644. Fields, L. P., & Mais, E. L. (1991). The Valuation effects of private placements of convertible debt. Journal of Finance, 46(5), 1925-1932. Fischer, E., Heinkel, R., & Zechner, J. (1989). Dynamic capital structure choice: Theory and tests. Journal of Finance, 44, 19-40. Flannery, M. J., & Rangan, K. P. (2006). Partial adjustment and target capital structures. Journal of Financial Economics, 79, 469-506. Frank, M. Z., & Goyal, V. K. (2009). Capital structure decisions: Which factors are reliably important? Financial Management, 38(1), 1-37. Frank, M. Z., & Goyal, V. K. (2003). Testing the pecking order theory of capital structure. Journal of Financial Economics, 67, 217-248. Frank, M. Z. & Goyal, V. K. (2008). Trade-off and pecking order theories of debt. In B. Espen Eckbo (Ed.), Handbook of Corporate Finance: Empirical Corporate Finance, Vol. 2. Handbooks in Finance Series. Elsevier/North Holland, Chapter 12. Gait, A. H., & Worthington, A. C. (2007). A primer on Islamic finance: definitions, sources, principles and methods. School of Accounting and Finance, University of Wollongong Working Paper Series. Gao, N. (2006). The Short ang Long Run Financia Impact of Corporate Outsourcing Transactions. Doctoral Thesis, University of Pittsburgh. Garvey, G. T. (1992). Leveraging the underinvestment problem: how high debt and management shareholdings solve the agency costs of free cash flow. Journal of Financia1 Research, 15(2), 149- 166. Gatchev, V. A., Spindt, P. A., & Tarhan, V. (2009). How do firms finance their investments? The relative importance of equity issuance and debt contracting costs. Journal of Corporate Finance, 15, 179-195. Ghazali, Z. B. (2008). The use of ESOS as interest alignment mechanism in malaysia: A mismatched of a problem and solutions. Doctoral thesis. Universiti Sains Malaysia, Malaysia. Giner, B., & Reverte, C. (2001). Valuation implications of capital structure: A contextual approach. The European Accounting Review, 10(2), 291-314. Gompers, P. A., & Lerner, J. (2003). The really long-run performance of initial public offerings: the pre-NASDAQ evidence. Journal of Finance, 58(4), 1355- 1392. Good, P. I. (2006). Resampling methods: a practical guide to data analysis. New York, NY: Birkhauser Boston. Graham, J. R., & Harvey, C. R. (2001). The theory and practice of corporate finance: evidence from the field. Journal of Financial Economics, 60, 187-243. Greene, W. H. (2003). Econometric analysis. New Jersey: Pearson Education, Inc. Gregory, A., Guermat, C., & Al-Shawawreh, F. (2009). UK IPOs: Long run returns, behavioural timing and pseudo timing. Xfi - Centre for Finance and Investment Discussion Paper no: 08/06. Hair, J. F., Black, W. C., Babin, B. J., & Anderson, R. E. (2010). Multivariate Data Analysis. New York: Pearson Prentice Hall. Harada, K., & Nguyan, P. (2006). Ownership concentration, agency conflicts, and dividend policy in Japan. Available at SSRN: http://ssrn.com/abstract=953433. Harris, M., & Raviv, A. (1 991). The theory of capital structure. Journal of Finance, 46, 297-356. Harvey, C. R., Lins, K. V., & Roper, A. H., (2002). The effect of capital structure when expected agency costs are extreme. Working paper, Duke University, Durham, NC. Hertzel, M., Lemmon, M., Linck, J., & Rees, L. (2002). Long-run performance following private placements of equity. Journal of Finance, 57, 2595-2617. Hillegeist, S. A., Elizabeth, K., Donald, P. C., & Kyle, G. L. (2004). Assessing the probability of bankruptcy. Review of Accounting Studies, 9. 5-34. Hoque, H. A. A. B., Kim, J. H., & Pyun, C. S. (2007). A comparison of variance ratio tests of random walk: A case of Asian emerging stock markets. International Review of Economics & Finance. 16(4), 488-502. Hovakimian, A. (2004). The role of target leverage in security issues and repurchases. Journal of Business, 77(4), 1041-1071. Hovakimian, A., Opler, T., & Titman, S. (2001). The debt-equity choice. Journal of Financial and Quantitative Analysis, 36, 1-24. How, J., Jelic, R., Saadouni, B., & Verhoeven, P. (2007). Share allocations and performance of KLSE second board IPOs. Pacific-Basin Finance Journal, 15, 292-314. Howe, J. S., 62 Lee, H. (2006). The long-run stock performance of preferred stock issuers. Review of Financial Economics, 15, 237-250. Howton, S. D., Howton, S. W., & Perfect, S. B. (1998). The market reaction to straight debt issues: the effects of free cash flow. Journal of Financial Research, 21, 219-228. Huang, R., & Ritter, J. R. (2009). Testing theories of capital structure and estimating the speed of adjustment. Journal of Financial and Quantitative Analysis, 44, 237-271. Huang, R., & Ritter, J. R. (2007). Testing theories of capital structure and estimating the speed of adjustment. p. 46, Retrieved from http://ssrn.com/abstract = 938564 Huh, S. W., & Subrahmanyam, A. (2005). Order flow patterns around seasoned equity offerings and their implications for stock price movements. International Review of Finance, 5(1) & (2), 75- 111. Ibrahim, Y., & Minai, M. S. (2009). Islamic bonds and the wealth effects: evidence from Malaysia. Investment Management and Financial Innovation, 6(1), 184-191. Ikenberry, D., Lakonishok, J., & Vermaelen, T. (1995). The underreaction to open market share repurchases. Journal of Financial Economics, 39, 181-208. Ismail, F. (2006). A study of alternative capital structure theories in the Malaysian context. Doctoral thesis. University of Nottingham, Nottingham, UK. James, C. (1987). Some evidence on the uniqueness of bank loans. Journal of Financial Economics, 19(2), 217-235. James, M. P. (2008). Three Essays on IPO Long Run Performance. Doctoral Thesis. University of Albama. Janjigian, V. (1987). The leverage changing consequences of convertible debt financing. Financial Management, 16(3), 15-21. Jeanneret, P. (2005). Use of the proceeds and long-term performance of French SEO firms . European Financial Management, 11(1), 99 - 122. Jegadeesh, N., & Karceski, J. (2009). Long-run performance evaluation: Correlation and heteroskedasticity-consistent tests. Journal of Empirical finance, 16, 101-111. Jelic, R., Saadouni, B. & Briston, R. (2001). Performance of Malaysian IPOs: Underwriter's reputation and management earnings forecasts. Pacific-Basin finance Journal, 9(5), 457-486. Jensen, M. C. (1986). Agency costs of free cash flow, corporate finance, and takeovers. The American Economic Review, 76(2), 323-329, Papers and Proceedings of the Ninety-Eighth Annual Meeting of the American Economic Association. Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3, 305-360. Jewell, J. J., & Livingston, M. B. (1997). The long-run performance of firms issuing bonds. Journal of Fixed Income, 7(2), 61-66. Jo, H., & Kim, Y. (2008). Ethics and disclosure: a study of the financial performance of firms in the seasoned equity offerings market. Journal of Business Ethics, 80, 855-878. Johnson, N. J. (1978). Modified t tests and confidence intervals for asymmetrical populations. Journal of the American Statistical Association, 73, 536-544. Jomadar, B. K. (2007). Islamic finance and securitization: Man-made tale or reality. Islamic Law and Law of the Muslim World Paper No. 8-18. Available at SSRN: http://ssrn.com/abstract=l093064 Jones, D. (2009, October 10). Islamic finance on the rise. VOA News, Retrieved October 15, 2009, from http://www.voanews.com/english/2009-10-10-voa2l.cfm Jong, A. D., Kabir, R., & Nguyen, T. T. (2008). Capital structure around the world: The roles of firm- and country-specific determinants. Journal of Banking & Finance, 32, 1954-1969. Kane, A., Marcus, A.J., & McDonald, R.L. (1984). How big is the tax advantage to debt?. Journal of Finance, 39, 841-853. Kang, J. K., Kim, Y. C., Park, K. J., & Stulz, R. M. (1995). An analysis of the wealth effects of Japanese offshore dollar-denominated convertible and warrant bond issues. Journal of Financial & Quantitative Analysis, 30(2). 257-270. Kang, Q., & Mitnik, O . A. (2009). CEO power and compensation in financially distressed firms. University of Miami, Department of Economics, Working Papers Series; 2010 -2. Kang, J. K. & Stulz, R. M. (1996). How different is Japanese corporate finance? an investigation of the information content of new security issues. The Review of Financial Studies, 9, 109-139. Kaplan, S. N., & Stromberg, P. (2009). Leveraged buyouts and private equity. Journal of Economic Perspectives, 23(1), 121-146. Kayhan, A., & Titman, S. (2007). Firms' histories and their capital structures. .Journal of Financial Economics, 83, 1-32. Khaleq, A. H. A., & Richardson, C. F. (2007). New horizons for Islamic securities: emerging trends in sukuk offerings. Chicago Journal of International Law, 7(2), 409-426. Khan, T. (2006). Company dividends and ownership structure: evidence from UK panel data. The Economic Journal, 116, 172-189. Khurshed, A., Goergen, M., & Mudambi, R. (2004). The long-run performance of initial public offerings (IPOs): can it be predicted?. Working Paper, Manchester School of Accounting and Finance. Kim, C. H., & Abdullah, N. A. H. (2009). Debt securities and corporate financing: Malaysian evidence. Malaysian Finance Association 11th Annual Conference 2009, Proceeding. Kim, J. H., & Shamsuddin, A. (2008). Are Asian stock markets eficient? Evidence from new multiple variance ratio tests. Journal of Empirical Finance, 15(3), 51 8-532. Kirkos, E., Spathis, C., & Manolopoulos, Y. (2010). Audit-firm group appointment: An artificial intelligence approach. Intelligent Systems in Accounting, Finance and Management, 17(1), 1-17. Kirkulak. B. (2008). The initial and long-run returns of Japanese venture capital-backed and non-venture capital-backed IPOs. International Journal of Managerial Finance, 4(2), 112-135. Kish, K. J, & Miles, L. (1993). Market reactions to callable and noncallable debt issues. Journal of Applied Business Research, 9(4), 54. Korajczyk, R. A., & Levy, A. (2003). Capital structure choice: Macroeconomic conditions and financial constraints. Journal of Financial Economics, 68, 75-109. Korajczyk, R. A., Lucas, D. J., & McDonald, R. L. (1992). Equity issues with timevarying asymmetric information. Journal of Financial and Quantitative Analysis, 27(3), 397-417. Kothari, S. P., & Warner, J. B. (1997). Measuring long-horizon security price performance. Journal of Financial Economics, 43 (3), 301-339. Kouki, M., & Guizani, M. (2009). Ownership structure and dividend policy: evidence from the Tunisian Stock Market. European Journal of Scientific Research, 25,42-53. Kraus, A., & Litzenberger, R. (1973). A state preference model of optimal financial leverage. Journal of Finance, 28(4), 911-922. Lasfer, M. A. (1995). Agency costs, taxes and debt. European Financial Management, 1,265-285. Leary, M.T., & Roberts, M.R. (2005). Do firms rebalance their capital structures?. Journal of Finance, 60, 2575-2619. Leary, M. T., & Roberts, M. R. (2007). The pecking order, debt capacity, and information asymmetry. Working Paper, Cornell University and University of Pennsylvania. URL: http://ssrn.com/abstract=5 55805 Lee, I., & Loughran, T. (1998). Performance following convertible bond issuance. Journal of Corporate Finance, 4, 185-207. Leuz, C., Nanda, D., & Wysocki, P. D. (2003). Earnings management and investor protection: An international comparison. Journal of Financial Economics, 69(3), 505-527. Lewis, C. M., Rogalski, R. J., & Seward, J. K. (2003). Industry conditions, growth opportunities and market reactions to convertible debt financing decisions. Journal of Banking and Finance, 27, 153-181. Li, E. X. N., Livdan, D., & Zhang, L. (2009). Anomalies. Review of Financial Studies, 22(11), 4301-4334. Lie, E. (2002). Do firms undertake self-tender offers to optimize capital structure?. The Journal of Business, 75, 609-639. Limmack, R. J. (2003). Discussion of glamour acquirers, method of payment and post-acquisition performance: the UK evidence. Journal of Business Finance & Accounting, 30(1) & (2), 343-350. Lins, K. V. (2003). Equity ownership and firm value in emerging markets. Journal of Financial and Quantitative Analysis, 38(1), 159-184. Loughran, T., & Ritter, J. R. (1995). The new issues puzzle. Journal of Finance, 50, 23-51. Loughran, T., & Ritter, J. R. (2000). Uniformly least powerful tests of market efficiency. Journal of Financial Economics, 55(3), 361-89. Lucas, D. J., McDonald, R. L. (1990). Equity issues and stock price dynamics. Journal of Finance, 45(4), 1019-1043. Lundstrum, L. L. (2009). Entrenched management, capital structure changes and firm value. Journal of Economics and Finance, 33(2), 161-175. Lyon, J. D., Barber, B. M., & Tsai, C. L. (1999). Improved methodology for tests of long-run abnormal stock returns. Journal of Finance, 54(1), 165-201. MacKinlay, A. C. (1997). Event studies in economics and finance. Journal of Economic Literature, 35, 13-39. MacKinnon, D. P. (2008). Introduction to statistical mediation analysis. New York, NY: Taylor & Francis Group. Mahakud, J., & Misra, A. K. (2009). Effect of leverage and adjustment costs on corporate performance: evidence from Indian companies. Journal of Management Research, 9(1), 35-42. Marsh, P. (1982). The choice between equity and debt: An empirical study. Journal of Finance, 37, 121-144. Masulis, R. W. (1983). The impact of capital structure change on firm value: some estimates. Journa1 of Finance, 38(1), 107-126. Mazouz, K., Saadouni, B., & Yin, S. (2008). The long-term performance of Hong Kong share-only and unit initial public offerings (IPOs). Journal of Multinational Financial Management, 18,209-228. McLoughlin, R., Safieddine, A., & Vasudevan, G. K. (2000). Investment banker reputation and the performance of seasoned equity issuers. Financial Management, 29(1), 96-110. Mikkelson, W. H., & Partch, M. M. (1986). Valuation effects of security offerings and the issuance process. Journal of Financial Economics, l5(1-2), 3 1-60. Miller, M. H. (1977). Debt and taxes. Journal of Finance, 32, 261-275. Miller, M. H. (1988). The Modigliani-Miller propositions after thirty years. The Journal of Economic Perspectives, 2(4), 99-120. Mitchell, M. L., & Stafford, E. (2000). Managerial decisions and long-term stock price performance. Journal Business, 73(3), 287-329. Modigliani, F., & Miller, M. H. (1958). The cost of capital, corporate Finance and the theory of investment. American Economic Review, 48, 261-297. Modigliani, F., & Miller, M. H. (1963). Corporate income taxes and the cost of capital: a correction. American Economic Review, 53, 433-443. Mohamad, S., Hassan, T., & Ariff, M. (2007). Research in an emerging Malaysian capital market: a guide to future direction. International Journal of Economics and Management, 1(2), 173-202. Moshirian, F., Ng, D., & Wu, E. (2010). Model specification and IPO performance: New insights from Asia. Research in International Business and Finance, 24, 62-74. Myers, S. C. (2001). Capital structure. Journal of Economic Perspectives, 15(2), 81-102. Myers, S. C. (1977). Determinants of corporate borrowing. Journal of Financial Economics, 5, 147-175. Myers, S. C. (1984). The capital structure puzzle. Journal of Finance, 39, 575-592. Myers, S. C., & Majluf, N. S. (1984). Corporate financing and investment decisions when firms have information that investors do not have, Journal of Financial Economics, 13, 187-221. Ngatuni, P., Capstaff, J., & Marshall, A. (2007). Long-term performance following rights issues and open offers in the UK. Journal of Business Finance & Accounting, 34(1) & (2), 33-64. Nor, F. M., & Sulong, Z. (2007). The interaction effect of ownership structure and board governance on dividends: evidence from Malaysian listed firms. Capital Market Review, 15, 73-101. Nunkoo, P. K., & Boateng, A. (2009). The empirical determinants of target capital structure and adjustment to long-run target: evidence from Canadian firms. Applied Economics Letters, 16, 1466-4291. Opler, T., & Titman, S. (1993). The determinants of leveraged buyout activity: Free cash flow vs. financial distress costs. Journal of finance, 48(5), 1985-1999. Ozkan, A. (2001). Determinants of capital structure and adjustment to long run target: evidence from UK company panel data. Journal of Business Finance & Accounting, 28(1) & (2), 175-1 98. Page, M. J., & Reyneke, I. (1997). The timing and subsequent performance of initial public offerings (IPOs) on the Johannesburg Stock Exchange. Journal of Business Finance & Accounting, 24(9) &(l0). 1401-1420. Parker, M. (2009a, December 07). Malaysia is keen to enhance Islamic finance sector: Zeti. McClatchy - Tribune Business News. Washington. Retrieved December 08, 2009, from http://proquest.umi.com.eserv.uum.edu.my/pqdweb?did=1915856 121&sid=2&Fmt=3&clientId=28929&RQT=309&VName=PQD Parker, M. (2009b, September 07). Malaysia's Islamic capital market on road to recovery. McClatchy - Tribune Business News, Washington: Retrieved December 08, 2009, from http://proquest.umi.com.eserv.uum.edu.my/pqdweb?did=1854244881&sid=3&Fmt=3&clientId=28929&RQT=309&VName=PQD Paudyal, K., Saadouni, B., & Briston, R. J. (1998). Privatisation initial public offerings in Malaysia: initial premium and long-term performance. Pacific-Basin Finance Journal, 6(5), 427-451. Pontiff, J., & Schill, M. J. (2002). Long-run seasoned equity offering returns: Data snooping, model misspecification, or mispricing?. A costly arbitrage approach. Available at SSRN: http://ssrn.com/abstract=302462. Pontiff, A., & Woodgate, J. (2008). Share issuance and cross-sectional returns. The Journal of Finance, 63(2), 921-945. Private Debt Securities. (2008). Retrieved, January 29, 2010, from http://bondinfo.bnm.gov.my/portal/server,pt?open=514& objID=27276&parentname=CommunityPage&parentid=3&mode=2&in_hi_userid=22874&cached=true Qian, Y. , Tian, Y., & Wirjanto, T. S. (2009). Do Chinese publicly listed companies adjust their capital structure toward a target level?. China Economic Review, Forthcoming. Rahim, R. A., Nor, F. M., Alias, N. A., & Yaakob, M. H. (2009). Impact of capital structure on firm value: a panel data analysis. Asian Finance Association 2009 International Conference Brisbane 30 June - 3 July, 2009. Available at http://www.business.uq.edu.au/download/attachments/31293547 /67 - abdulrahim_paper.pdf. Rajagopal, S. (2009). On the portability of capital structure theory: does the traditional model fit in an emerging market?. Proceedings of the Academy for Studies in International Business, 9 (1). Rajan, R. G., & Zingales, L. (1995). What do we know about capital structure? Some evidence fiom international data. Journal of Finance, 50(5), 1421-1460. Ritter, J. R. (1991). The long-run performance of initial public offerings. Journal of finance, 46, 3-27. Robichek, A., & Myers, S. (1966). Problems in the theory of optimal capital structure. Journal of Financial and Quantitative Analysis, 1, 1 - 35. Roon, F. & Veld. C., (1998). Announcement effects of convertible bond loans and warrant-bond loans: an empirical analysis for the Dutch market. Journal of Banking and Finance, 22, 1481-1506. Ross, S. A. (1977). The determination of financial structure: the incentive-signaling approach. The Bell Journal of Economics, 8(1), 23-40. Safieddine, A. (2009). Islamic financial institutions and corporate governance: new insights for agency theory. Corporate Governance: An International Review, 17(2), 142-158. Schultz, P. (2003). Pseudo market timing and the long-run underperformance of IPO's. Journal of Finance, 58,483-5 17. Scott, Jr., J. H. (1976). A Theory of Optimal Capital Structure. The Bell Journal of Economics, 7(1), 33-54. Securities Commission. (2005). Annual Report Serrasqueiro, Z. M. S., & Rogao, M. C. R. (2009). Capital structure of listed Portuguese companies: determinants of debt adjustment. Review of Accounting and Finance, 8(1), 54-75. Shimizu, S. (2008). Corporate bond markets of Korea, Malaysia and Thailand. Journal of International Economic Studies, 22, 71-86. Shyam-Sunder, L., & Myers, S. C. (1999). Testing static tradeoff against pecking order models of capital structure. Journal of Financial Economics, 51, 219- 244. Singaravelu Naidu, R. (2008). Aftermarket Performance of Initial Public Offerings. Doctoral Thesis, University of Cambridge, United Kingdom. Slower economic growth and lower bond issuance but recession not on the cards. (2008, November 05). Malaysian Rating Corporation Berhad. Retrieved from http://www.marc.com.my/home/index.php?p=contents-item&id=178 Spiess, D. K., & Affleck-Graves, J. (1995). Underperformance in long-run stock returns following seasoned equity offerings. Journal of Financial Economics, 38, 243-267. Spiess, D. K., & Affleck-Graves, J. (1999). The long-run performance of stock returns following debt offerings. Journal of Financial Economics, 54, 45-73. Sutton, C. D., (1993). Computer-intensive methods for tests about the mean of an asymmetrical distribution. Journal of the American Statistical Association, 88, 802-810. The World Bank. (2009). Country classification. Retrieved December 06, 2009, from http://go.worldbank.org/K2CKM78CC0 Titman, S. (1984). The effect of capital structure on a firm's liquidation decision. Journal of Financial Economics, 13, 13 7-151. Titman, S., & Tsyplakov, S. (2007). A dynamic model of optimal capital structure. Review of Finance, 11 (3), 40 1-451. Titman, S., & Wessels, R. (1988). The determinants of capital structure choice. The Journal of Finance, 43(1), 1-19. Viswanathan, S., & Wei, B. (2008). Endogenous events and long-run returns. The Review of Financial Studies, 21 (2), 855-888. Vithessonthi, C. (2008). The long-run performance of initial public offerings: new evidence from Thailand. The Business Review Cambridge. 10(1), 315-321. Walsh, E. J., & Ryan, J. (1997). Agency and tax explanations of security issuance decisions. Journal of Business Finance & Accounting, 24(7) & (8), 943-961. Wang, Y. (2005). Underpricing and Long-Run Performance of Chinese IPOs. Masters dissertation, Concordia University, Montreal, Quebec, Canada. Warner, J. B. (1977). Bankruptcy costs: some evidence. The Journal of Finance, 32(2), 337-347. Wolfe, D. R. (2009). Defining the level of abnormal return underperformance that exists for issuers of high-yield bonds. Applied Financial Economics, 19, 779-794. Wu, C., & Kwok, C. C. Y. (2007). Long-run performance of global versus domestic initial public offerings. Journal of Banking & Finance, 31, 609-627. Yip, Y., Su, Y., & Ang, J. R. (2009). Effects of underwriters, venture capital and industry on long-term initial public offering performance. Managerial finance, 35(8), 700-715. Yong, O., Yatim, P., & Sapian, R. Z. Z. (2002). Size of offer, over-subscription ratio and performance of malaysian IPOs. Malaysian Management Journal, 6(1) & (2), 35-51. Yu, Y. M., & Jiang, S. (2010). Corporate life cycle and share repurchases: Evidence from the Taiwan Stock Market. African Journal of Business Management, 4(14), 3139-49. Zahn, J. W. M., Singh, I., & Heniro, J. (2007). Is there an association between intellectual capital disclosure, underpricing and long-run performance?. Journal of Human Resource Costing & Accounting, 11 (3), 178-213. Zaluki, N. A. A., Campbell, K., & Goodacre, A. (2007). The long run share price performance of Malaysian initial public offerings (IPOs). Journa1 of Business Finance & Accounting, 34(1) & (2), 78-110. Zhang, Y. (2009). Are debt and incentive compensation substitutes in controlling the free cash flow agency problem?. Financial Management, 38(3), 507-541.

Debt Issuances, Capital Structure Changes and Stock Return Performance

Similar Items