Equity Issues and Offering Dilution
نویسندگان
چکیده
This study investigates the effect on stock prices of seasoned equity offerings. The results demonstrate that the announcement of equity otlerings reduces stock prices significantly. For industrial issues, regression results indicate that announcement day price reduction is significantly and negatively related to the size of the equity offering. The results appear not to be explained by changes in capital structure associated with the equity offerings. The findings are consistent both with the hypothesis that equity issues are viewed by investors as negative signals and with the hypothesis that there is a downward sloping demand for a firm’s shares.
منابع مشابه
Ethical and Professional Issues Training for Students and Staff of Laboratory Medicine
Background : Medical Laboratory plays a critical role in maintaining and promoting health. Increasing wide applications of laboratory medicine in clinical practice have highlighted specific topics in the areas of social, professional and ethical issues in the laboratory. Despite the important role of clinical lab in health system, ethical issues have been rarely discussed for clinical labs. Con...
متن کاملConvertible bonds and bank risk-taking
We study how contingent capital that converts in equity ahead of default affects bank risk-shifting. Going concern conversion restores equity value in highly levered states, thus reducing heightened risk incentives. In contrast, conversion at default for traditional bail-inable debt has no effect on endogenous risk. The main beneficial effect comes from reduced leverage at conversion. In contra...
متن کاملEarnings Timeliness and Seasoned Equity Offering Announcement Effect
This paper examines the relation between the Seasoned Equity Offering (SEO) announcement effect and earnings timeliness. I predict that firms with greater earnings timeliness tend to have less information asymmetry between managers and investors, thus decreasing the magnitude of the price drop at the SEO announcement. As anticipated, I find that SEO negative announcement effect varies inversely...
متن کاملEconomic Consequences of Voluntary Disclosure Before Seasoned Equity Offerings: The Impact of the 2005 Securities Offering Reform
In 2005, the SEC enacted the Securities Offering Reform (Reform), which relaxes ‘gun jumping’ restrictions by providing safe harbors for certain disclosures before equity offerings. The SEC argues that the disclosure restrictions are unnecessary, as they prevent timely and broad information flow before an important corporate event. However, Reform opponents argue that the gun-jumping restrictio...
متن کاملDoes Reputation Talk? The Matching of Underwriters and Issuing Firms
The purpose of this paper is to examine the role of reputation in the matching of underwriters and issuing firms in the straight corporate bond market in Japan. While the existing literature already investigates how the issuing firm chooses its underwriter at the time of issue, this paper uses initial and seasoned issues of straight corporate bonds to examine how the matching of underwriters an...
متن کامل