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The document examines the market reaction to original-issue deep discount (OID) bonds, which were popular before July 1982 due to tax advantages. It finds that stock prices responded positively to OID debt announcements during this period, contrasting with negative responses to par debt announcements, and suggests that financial innovation can mitigate negative perceptions of debt financing. After the tax benefits were removed, the positive stock price reactions to OID debt ceased, indicating the importance

Author

g21k6350

Language

EN