Leverage decisions and the effect of corporate Eurobond offerings.

This study examines the stock price impact induced by the announcement of Eurobonds issued by industrial US firms over the period 1974-84. In contrast to the negative effect of domestic debt announcements reported in prior research, we document a positive, statistically significant, announcement impact of Eurobonds on stockholder wealth. Further, in analysing a sample of firms that issued both domestic and Euro-debt within a six-month interval, we find that the negative impact of domestic debt is significantly different from the positive impact of the matched Eurobond issue. This positive impact is consistent with advantages attributed to the Eurobond market, namely, lower interest costs relative to domestic debt, absence of SEC (Securities and Exchange Commission) regulation and less restrictive debt covenants. [ABSTRACT FROM AUTHOR]