The Effect of Debt Securities Issuance towards Equity Market Behavior in Malaysia
Kesan Penerbitan Sekuriti Hutang terhadap Kelakuan Pasaran Ekuiti di Malaysia

Faculty of Business, Communications and Law
INTI International University, Persiaran Perdana BBN
Putra Nilai, 71800 Nilai, Negeri Sembilan, Malaysia

sezkim@newintil.edu.my

School of Economics, Finance and Banking
College of Business, Universiti Utara Malaysia
06010 UUM Sintok, Kedah, Malaysia

diana897@uum.edu.my

Abstract

The study investigates the impact of debt securities issuance on the equity market behavior of the issuers. Event study results reveal that overall debt securities issuers experience an increase in equity return and a decrease in systematic risk, while total risk remains unchanged. The further examination of the 100 debt securities issuing companies finds significant differences between hybrid and non-hybrid debt securities issues. Hybrid debt securities experience a significant increase in equity return, decline in systematic risk and increase in total risk. Non-hybrid debt securities issues, however, are found to have no impact on equity market behavior. The findings of the study imply that the general decline in systematic risk for debt securities issuing companies could motivate the issuance of debt securities, particularly the hybrid type, and thus improve market liquidity. Further, non-hybrid debt securities may not be the appropriate alternative for sending a market signal as no impact on market behavior is found following the issuance

Keywords

Debt Securities; Equity Market Behavior; Hybrid Debt Securities; Non-Hybrid Debt Securities; Systematic Risks; Total Risks

Citation

Chin, S. K., & Abdullah, N. A. H. (2012). The Effect of Debt Securities Issuance towards Equity Market Behavior in Malaysia. Jurnal Pengurusan, 36, 45–58.

@article{chin2012effect,
  title={The Effect of Debt Securities Issuance towards Equity Market Behavior in Malaysia},
  author={Chin, Sze Kim and Abdullah, Nur Adiana Hiau},
  journal={Jurnal Pengurusan},
 

volume={36},
  number={},
  pages={45—58},
  year={2012},
  doi={},
  publisher={Penerbit UKM},
}

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36 (2012) 45 – 58

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