Bank Loan Announcement Effects: Evidence from a Comprehensive 8-K Sample

Steven Wei Ho, Clark Liu, and Shujing Wang

♦ We investigate whether bank loan financing conveys valuable private information from 1994 to 2018 using a sample of over 10,000 bank loan announcements identified from 8-K filings. We show that the positive announcement effect is persistent and closely related to the information revealed in loan characteristics: The effect is stronger when deals have higher materiality, more favorable pricing, larger lead bank shares, and higher syndicate concentration. The effect is also stronger when lenders have higher credit quality and when credit market conditions are worse. The insignificant wealth effect documented in several early studies is potentially driven by small sample size.

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