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dc.contributor.authorKallberg, Jarl
dc.contributor.authorLiu, Crocker H.
dc.contributor.authorVillupuram, Sriram
dc.date.accessioned2020-09-12T21:07:50Z
dc.date.available2020-09-12T21:07:50Z
dc.date.issued2013-01-01
dc.identifier.other9372199
dc.identifier.urihttps://hdl.handle.net/1813/72063
dc.description.abstractThis study analyzes the reactions of equity holders and bondholders to the announcement of 427 preferred stock issues. We document an average equity announcement effect of −0.65%. This reaction is positively influenced by a number of measures of firm creditworthiness and transparency and is higher for bank issuers. The equity market reaction is negatively influenced by convertibility (and the moneyness of the embedded option) and by the firm's accounting treatment of the issue (specifically if the issue is classified as equity). We find that average credit default swap spreads decrease by 50 basis points after the issue announcement. This decrease is also larger for more creditworthy and transparent firms. Convertibility and the moneyness of the embedded option further decrease the CDS spread. In aggregate, the decrease in equity value is much smaller than the increase in the value of the issuer's debt.
dc.language.isoen_US
dc.relationAn alternate copy of this item is available elsewhere in eCommons.
dc.relation.hasversionKallberg, J., Liu, C. H., & Villupuram, S. (2013). Preferred stock: Some insights into capital structure. Journal of Corporate Finance, 21, 77–86.
dc.relation.urihttps://hdl.handle.net/1813/70910
dc.rightsRequired Publisher Statement: © Elsevier. Final version published as: Kallberg, J., Liu, C. H., & Villupuram, S. (2013). Preferred stock: Some insights into capital structure. Journal of Corporate Finance, 21, 77–86. Reprinted with permission. All rights reserved.
dc.subjectpreferred stock
dc.subjectcapital structure
dc.subjectcredit default swap
dc.titlePreferred Stock: Some Insights into Capital Structure
dc.typearticle
dc.relation.doihttps://doi.org/10.1016/j.jcorpfin.2013.01.005
dc.description.legacydownloadsLiu3_Preferred_stock.pdf: 725 downloads, before Aug. 1, 2020.
local.authorAffiliationKallberg, Jarl: Arizona State University
local.authorAffiliationLiu, Crocker H.: chl62@cornell.edu Cornell University School of Hotel Administration
local.authorAffiliationVillupuram, Sriram: Colorado State University


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