Abstract
We demonstrate that analysts revise their forecasts of net operating income downward following the announcement of an equity-for-debt swap. Their revisions are positively correlated with the size of the stock-price reaction to the swap announcement. This evidence supports the hypothesis that announcements of equity-for-debt swaps convey information about the expected level of cash flows of the firm. We also provide evidence that this information is about transitory changes in the expected cash flows.
Original language | English |
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Pages (from-to) | 349-370 |
Number of pages | 22 |
Journal | Journal of Financial Economics |
Volume | 25 |
Issue number | 2 |
DOIs | |
State | Published - Dec 1989 |