An Ex Ante Model To Estimate Issue Costs
نویسنده
چکیده
Research of common stock offerings finds that the negative impact of issuance expenses can account for over three-fifths of the fall in the announcement period returns. Given the importance of issue costs, we extend the research by offering a model to estimate expected values for issue costs. This model can be used to generate the expected fall in stock value resulting from issue costs. We also perform correlation analysis detailing the significant relationship between issue costs and size variables. Lastly, we do regression analysis and find issue costs to be a key explanatory variable when accounting for stock returns.
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