Market reactions when zero-leverage firms obtain bank finance

Grosse, MJ

Market reactions when zero-leverage firms obtain bank finance

Grosse, MJ

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Publication Type:: Thesis
Issue Date:: 2014

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Field	Value	Language
dc.contributor.author	Grosse, MJ
dc.date.accessioned	2014-12-04T05:41:24Z
dc.date.available	2014-12-04T05:41:24Z
dc.date.issued	2014
dc.identifier.uri	http://hdl.handle.net/10453/30387
dc.description	University of Technology, Sydney. Faculty of Business.	en_US
dc.description.abstract	Prior studies of bank loan announcements depict significant capital market reactions. More recent evidence however, fails to identify such reactions (Fields et al. 2006, Maskara & Mullineaux 2011). In this study, I consider market reactions to loan initiations where the borrower has no prior record of bank lending. Zero-leverage firms are firms that have zero outstanding short-term or long-term debt in their capital structure (Strebulaev & Yang 2013). Using a unique hand collected sample of bank loan announcements for Australian Mining Development Stage entities, I find that both initial bank loans and subsequent bank loans attract significant market reactions. Further, I produce evidence consistent with announcements of such loans reducing information asymmetry which I proxy for with bid-ask spreads and trading volume. My final analysis examines evidence of bank specialisation. I find that borrowers from the industry leader in terms of loan origination (Macquarie Bank) in this sector exhibit stronger abnormal returns.	en_US
dc.format	Thesis (PhD)	en_US
dc.language.iso	en	en_US
dc.relation	https://opus.lib.uts.edu.au/bitstream/10453/30387/2/02whole.pdf
dc.rights	The author owns the copyright in this thesis including all reproduction and reuse rights for the work. The work may not be altered without the permission of the copyright owner. Attribution is essential when quoting or paraphrasing from this thesis.
dc.rights	au.edu.uts.lib/ppc
dc.rights	info:eu-repo/semantics/openAccess
dc.subject	Bank loans.	en
dc.subject	Markets.	en
dc.subject	Valuation.	en
dc.title	Market reactions when zero-leverage firms obtain bank finance	en_US
dc.type	Thesis
utslib.copyright.status	open_access

Abstract:

Prior studies of bank loan announcements depict significant capital market reactions. More recent evidence however, fails to identify such reactions (Fields et al. 2006, Maskara & Mullineaux 2011). In this study, I consider market reactions to loan initiations where the borrower has no prior record of bank lending. Zero-leverage firms are firms that have zero outstanding short-term or long-term debt in their capital structure (Strebulaev & Yang 2013). Using a unique hand collected sample of bank loan announcements for Australian Mining Development Stage entities, I find that both initial bank loans and subsequent bank loans attract significant market reactions. Further, I produce evidence consistent with announcements of such loans reducing information asymmetry which I proxy for with bid-ask spreads and trading volume. My final analysis examines evidence of bank specialisation. I find that borrowers from the industry leader in terms of loan origination (Macquarie Bank) in this sector exhibit stronger abnormal returns.

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http://hdl.handle.net/10453/30387