The effect of private debt securities on company performance
Issuing private debt securities is one of the options some companies have, when making a capital structure decision. These debt securities are issued to the public as private debt. I examine the effect the issuance of private debt securities on return on assets and stock returns. The research uses a regression analysis and an event study to examine the effect of issuing debt securities on company performance. The data used is data on first time issuers from 2001 until 2020. This study also controls for whether an asset purchase program is active during the time of issuance. The study finds some evidence that return on assets are positively affected by the issuance of private debt securities. Stock prices are found to react significantly positively to the issuance of private debt securities. This could mean that the market expects a better performance after the issuance of a private debt security.
Faculteit der Managementwetenschappen