Journal of Financial Economics Vol. 25 No. 2 1989

The information content of equity-for-debt swaps

Ronen Israel¹; Aharon R. Ofer^2,3; Daniel R. Siegel²

¹ University of Michigan–Ann Arbor · ² Northwestern University · ³ Tel Aviv University

Abstract

We demonstrate that analysts revise their forecasts of net operating income downward following the announcement of an equity-for-debt swap. Their revisions are positively correlated with the size of the stock-price reaction to the swap announcement. This evidence supports the hypothesis that announcements of equity-for-debt swaps convey information about the expected level of cash flows of the firm. We also provide evidence that this information is about transitory changes in the expected cash flows.

DOI

10.1016/0304-405x(89)90087-1

Volume

25

Issue

2

Pages

349-370

Language

en

Sources

bibtex:phds-export.bib openalex crossref

Cite

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