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Journal of Economics and Finance

, Volume 21, Issue 2, pp 75–82 | Cite as

Bond review and rating change announcements: An examination of informational value and market efficiency

  • Richard A. Followill
  • Terrence Martell
Article

Abstract

This paper examines the impact of announcements of both bond rating reviews and rating changes on equity returns. We find that announcements of review for possible down grading of debt have a significant negative effect on stock prices while subsequent actual downgrades have a negligible impact. Further, we find that press releases convey new information to the market whereas the subsequent reporting of this information in the financial press causes little market reaction. We conclude that extreme care regarding details of the dissemination of financial information must be exercised in any event study.

Keywords

Stock Price Stock Return Abnormal Return Press Release Excess Return 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Copyright information

© Springer 1997

Authors and Affiliations

  • Richard A. Followill
    • 1
  • Terrence Martell
    • 2
  1. 1.Department of Economics and FinanceEast Tennessee State UniversityJohnson City
  2. 2.Center for ManagementBaruch CollegeNew York City

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