Syndicated Loan Announcements and Borrower Value

Posted: 24 Jun 2003

See all articles by Dominic Gasbarro

Dominic Gasbarro

Murdoch University

Kim-Song Lee

Murdoch University

Robert G. Schwebach

Colorado State University, Fort Collins - College of Business

J. Kenton Zumwalt

Colorado State University, Fort Collins - Department of Finance & Real Estate

Abstract

Announcements of syndication loans increase borrowers' shareholder wealth if they are revolving credit agreements, but not if they are term loans. Share price responses to revolving credit announcements are positive and significant, whereas the wealth effect for term loans is negative and significant. The results show that announcements from both the financial press and commercial information providers can affect borrower share price reaction. Overall, single syndication announcements appear to be more newsworthy than multiple announcements reported in the financial press, and we find evidence of information leakage, post-announcement drift, or both.

JEL Classification: G14, G21

Suggested Citation

Gasbarro, Dominic and Lee, Kim-Song and Schwebach, Robert G. and Zumwalt, J. Kenton, Syndicated Loan Announcements and Borrower Value. Available at SSRN: https://ssrn.com/abstract=397720

Dominic Gasbarro (Contact Author)

Murdoch University ( email )

South Street
Murdoch 6150, Western Australia
Australia

Kim-Song Lee

Murdoch University ( email )

South Street
Murdoch 6150, Western Australia
Australia

Robert G. Schwebach

Colorado State University, Fort Collins - College of Business ( email )

Dept. of Finance & Real Estate
Fort Collins, CO 80523
United States
970-491-5547 (Phone)
970-491-7665 (Fax)

J. Kenton Zumwalt

Colorado State University, Fort Collins - Department of Finance & Real Estate ( email )

Fort Collins, CO 80523
United States

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