The market reaction to debt announcements: UK evidence surrounding the global financial crisis

Andrew Marshall, Laura McCann, Patrick McColgan (Corresponding Author)

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We examine the stock market response to announcements of public, bank and privately placed debt issuance by large UK firms surrounding the global financial crisis of 2008. Prior to the crisis, we find that stock prices respond positively to announcements of bank debt issuance only. This is restricted to the sub-sample of syndicated bank loans and this is suggestive of the certification from multiple lenders conveying a signal of creditworthiness. We find that abnormal returns on the announcement of bank loans have declined since the financial crisis, both in absolute terms and in comparison to alternative borrowing sources. Overall, our results suggest that surrounding the global financial crisis of 2008, bank loans have become less informative as a signal of the creditworthiness of borrowing firms.
Original languageEnglish
Pages (from-to)92-109
Number of pages18
JournalBritish Accounting Review
Issue number1
Early online date20 Apr 2018
Publication statusPublished - Jan 2019

Bibliographical note

We are grateful to Douglas Cumming, Dick Davies, Paul Draper, and seminar participants at the 2015 BAFA Annual Conference (Manchester), 2015 EAA Annual Congress (Glasgow), 2016 INFINITI Conference on International Finance (Dublin), 2016 Young Finance Scholars Conference (Sussex), and the 2016 BAFA Scottish Area Group (Glasgow) conference for comments and suggestions on earlier versions of this work. We also thank Martin Kemmitt for helpful research assistance on this project. All errors remain our own.


  • public bonds
  • bilateral loans
  • syndicated loans
  • privately placed debt
  • event study
  • borrower value


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