Some Evidence on the Uniqueness of Initial Public Debt Offerings


  • Sudip Datta,

  • Mai Iskandar-Datta,

  • Ajay Patel

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    • Datta is from Bentley College, Iskandar-Datta is from Suffolk University, and Patel is at Wake Forest University. Datta acknowledges partial support from the Robert and Julia Dorn Professorship. Iskandar-Datta and Patel acknowledge partial financial support for the project from their respective institutions. René M. Stulz (the editor) and an anonymous referee deserve special thanks for their valuable comments that substantially improved the paper. We also wish to thank Chris Barry, Mark Bayless, David T. Brown, Ki C. Han, Nellie Liang, Felicia Marston, Robyn McLaughlin, Tim Mech, Charles Moyer, Jorn-Steffen Pischke, and seminar participants at the Financial Management Association meeting, the Financial Management Association's International Conference (Zurich), the Southern Finance Association's annual meeting, and Suffolk University for their helpful comments. The usual disclaimer applies.


Debt initial public offerings (IPOs) represent a major shift in a firm's financing policy by both extending debt maturity and altering the public-private debt mix. In contrast to findings for seasoned debt offerings, we document a significantly negative stock price response to debt IPO announcements. This result is consistent with debt maturity and debt ownership structure theories. The equity wealth effect is negatively related to the offer's maturity, and positively related to the degree of bank monitoring. We find that firms with less information asymmetry and firms with higher growth opportunities experience a less adverse stock price response.