Canadian Bank Stock Reaction to the Citicorp Loan Loss Announcement of May, 1987

Abstract

This study examines the price behavior of a sample of Canadian bank stocks surrounding the announcement by Citicorp of a large increase in their provision for loan losses induced by their exposure to debt of lesser developed countries in general and their exposure to Brazilian debt in particular. Both the US and Canadian reactions were positive but the magnitude of the Canadian abnormal returns was higher than the US. Both responses differ from the UK negative reaction. The UK response is attributed to a substantive difference in tax policy.

Citation

Cushing, W.W. (1994), "Canadian Bank Stock Reaction to the Citicorp Loan Loss Announcement of May, 1987", Managerial Finance, Vol. 20 No. 4, pp. 38-46. https://doi.org/10.1108/eb018470