Announcement day effects and the role of strategic transactions: An empirical investigation
The evidence of a negative price response generally associated with the initial announcement of seasoned common stock offerings demands a more explicit rationale for why management would undertake an action that serves to lower current shareholder wealth. Although adverse selection appears to be the prevailing explanation for this price response, it is not evident that overvaluation should suffice as an explanation for both the equity-offering decision and the pecking-order financing preference. The purpose of this study is to explore the validity of overvaluation apart from the issue of pecking-order as an explanation for this decision and the corresponding price response. Particular emphasis is put upon the market's interpretation of the equity offering and the characteristics associated with management, the firm, and the offering used by the market to arrive at this interpretation.
|Authors:||Goebel, Joseph Michael|
Florida State University Libraries
|Type of publication:||Other|
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