Jacinta Chan Phooi M’ng, Mahfuzur Rahman and Goh Kok Kit
The purpose of this paper is to investigate the effect of bond issuance announcements on share price returns in three emerging markets and examine the characteristics of bond…
Abstract
Purpose
The purpose of this paper is to investigate the effect of bond issuance announcements on share price returns in three emerging markets and examine the characteristics of bond issues that affect the abnormal share price returns of the company.
Design/methodology/approach
This study employs event study, correlation and multiple regression techniques to attain the research objectives. The authors test hypotheses on 105 public listed companies from Malaysia, Singapore and Thailand, during the period of 2008–2014.
Findings
The findings show positive cumulative average abnormal returns resulting from the announcement of corporate bond issuance for Malaysia, Singapore and Thailand. The results reveal that there is a significant effect of bond issuance announcements on share price returns. The results also disclose that the market is not efficient at its semi-strong form as proposed by the market efficiency hypothesis.
Originality/value
The results provide better references for fund managers and investors in capital markets to take advantage of the abnormal returns resulting from bond issuance announcements.