Abstract

http://ssrn.com/abstract=316565
 
 

References (43)



 
 

Citations (18)



 


 



The Long-Run Performance of Secondary Equity Issues: A Test of the Windows of Opportunity Hypothesis


Craig G. Dunbar


Ivey Business School, Western University

Jonathan Clarke


Georgia Institute of Technology - Finance Area

Kathleen M. Kahle


University of Arizona - Department of Finance

June 2002


Abstract:     
We examine long-run stock and operating performance following secondary equity offerings. For a subsample of secondary issuers in which the seller is an insider, both three- and five-year post-issue abnormal stock returns are significantly negative. The findings are robust to alternative long-run abnormal return measurement methodologies. The abnormal returns are large relative to the initial market reaction (mean and median five-year abnormal returns of -33.33% and -73.80%, respectively). The operating performance of these firms also declines subsequent to the issue. This supports the hypothesis that the negative performance of secondary equity offerings can be attributed to managers exploiting "windows of opportunity" by issuing overvalued shares.

Number of Pages in PDF File: 46

Keywords: secondary equity issues, long-run performance

JEL Classification: G32

working papers series





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Date posted: July 11, 2002  

Suggested Citation

Dunbar, Craig G. and Clarke, Jonathan and Kahle, Kathleen M., The Long-Run Performance of Secondary Equity Issues: A Test of the Windows of Opportunity Hypothesis (June 2002). Available at SSRN: http://ssrn.com/abstract=316565 or http://dx.doi.org/10.2139/ssrn.316565

Contact Information

Craig G. Dunbar (Contact Author)
Ivey Business School, Western University ( email )
1255 Western Road
Room 2309
London, Ontario N6G 0N1
Canada
519-661-3716 (Phone)
519-661-3963 (Fax)
Jonathan Clarke
Georgia Institute of Technology - Finance Area ( email )
755 Ferst Drive
Atlanta, GA 30332
United States
404-894-4929 (Phone)
404-894-6030 (Fax)
HOME PAGE: http://mgt.gatech.edu/directory/clarke.html
Kathleen M. Kahle
University of Arizona - Department of Finance ( email )
McClelland Hall
P.O. Box 210108
Tucson, AZ 85721-0108
United States
520-621-7489 (Phone)
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