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Market reaction to published and non-published corporate loan announcements

Fery, J., Gasbarro, D., Woodliff, D.R. and Zumwalt, J.K. (2003) Market reaction to published and non-published corporate loan announcements. The Quarterly Review of Economics and Finance, 43 (1). pp. 1-10.

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Prior research examining the role of financial intermediaries in reducing the problems of information asymmetry has reported that borrowers experience a positive share price reaction to credit agreement announcements. However, it is generally acknowledged that these studies have the potential for a reporting bias because they use only one source of information for credit agreement announcements. To examine this reporting bias, we distinguish between “published” and “non-published” announcements in Australia. We find that borrowers’ share prices react positively to announcements that are published in both the financial press and by a dedicated information provider. No statistically significant reaction is observed for the non-published credit agreements.

Publication Type: Journal Article
Murdoch Affiliation: School of Commerce
Publisher: Elsevier
Copyright: © 2002 Board of Trustees of the University of Illinois
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