Abstract

http://ssrn.com/abstract=1953337
 
 

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The Effect of Information Releases on the Pricing and Timing of Equity Issues


Robert A. Korajczyk


Northwestern University - Kellogg School of Management

Deborah J. Lucas


Northwestern University - Kellogg School of Management; National Bureau of Economic Research (NBER)

Robert L. McDonald


Northwestern University - Kellogg School of Management

June 1, 1991

Review of Financial Studies, Vol. 4, No. 4, pp. 685-708, 1991

Abstract:     
With time-varying adverse selection in the market for new equity issues, firms will prefer to issue equity when the market is most informed about the quality of the firm. This implies that equity issues tend to follow credible information releases. In addition, if the asymmetry in information increases over time between information releases, the price drop at the announcement of an equity issue should increase in the time since the last information release. Using earnings releases as a proxy for informative events, we find evidence supporting these propositions.

Number of Pages in PDF File: 34

Keywords: Equity Issues, Adverse Selection, Asymmetric Information

JEL Classification: G32

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Date posted: November 3, 2011  

Suggested Citation

Korajczyk, Robert A. and Lucas, Deborah J. and McDonald, Robert L., The Effect of Information Releases on the Pricing and Timing of Equity Issues (June 1, 1991). Review of Financial Studies, Vol. 4, No. 4, pp. 685-708, 1991. Available at SSRN: http://ssrn.com/abstract=1953337

Contact Information

Robert A. Korajczyk (Contact Author)
Northwestern University - Kellogg School of Management ( email )
2001 Sheridan Road
Evanston, IL 60208
United States
847-491-8336 (Phone)
847-491-5719 (Fax)
Deborah J. Lucas
Northwestern University - Kellogg School of Management ( email )
2001 Sheridan Road
Evanston, IL 60208
United States
847-491-8333 (Phone)
847-491-5719 (Fax)
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Robert L. McDonald
Northwestern University - Kellogg School of Management ( email )
2001 Sheridan Road
Evanston, IL 60208
United States
847-491-8344 (Phone)
847-491-5719 (Fax)
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