We examine the price behavior of the firm's common stock associated with cancelled straight debt offerings. Excluding utilities, we find negative excess returns associated with offering and cancellation announcements. Further, the stronger withdrawal reactions we find, when the funds were to be used for capital expenditures, may signal a decline in profitable investment opportunities. These results are consistent with Miller and Rock's (1985) hypothesis.
No takes yet. Share an insight, caveat, or question.
Jensen et al. (1991) studied this question.
Synapse has enriched 5 related papers. Consider them for comparative context: