0 FIRM CHARACTERISTICS’ INFLUENCE ON THE WEALTH EFFECT OF DEBT ISSUE ANNOUNCEMENTS IN MALAYSIA Yusnidah Ibrahim * Professor College of Business Universiti Utara Malaysia Email: yibrahim@uum.edu.my Kamarun Nisham Taufil Mohd Senior Lecturer College of Business Universiti Utara Malaysia Email: kamarun@uum.edu.my Md Mohan Uddin PhD Candidate College of Business Universiti Utara Malaysia Email: mohanuddin@gmail.com Abstract This paper investigates the influence of firm characteristics which represent proxy for financial distress costs, interest tax savings, agency costs, and information asymmetry on the wealth effect of debt issue announcements. A total of 136 debt issues during the period February 2001 to October 2009 are considered in the sample of this study. Results indicate significant positive abnormal returns surrounding the debt issue announcements and that the wealth effect is influenced positively by managerial ownership but negatively influenced by asset tangibility, existing leverage and the level of free cash flows. Keywords: corporate finance, capital structure, wealth effect, event study, information asymmetry. * Correspondence to: Professor Dr. Yusnidah Ibrahim. College of Business, Universiti Utara Malaysia, 06010 Sintok Kedah. Email: yibrahim@uum.edu.my.