Frequent Issuers' Influence on Long-Run Post-Issuance Returns
Matthew T. Billett
Indiana University - Kelley School of Business - Department of Finance
Mark J. Flannery
University of Florida - Department of Finance, Insurance and Real Estate
Jon A. Garfinkel
University of Iowa - Tippie College of Business
April 29, 2010
Journal of Financial Economics (JFE), Forthcoming
Prior studies conclude that firms’ equity underperforms following many individual sorts of external financing. These conclusions naturally raise significant questions about market efficiency and/or about the techniques used to measure long run “abnormal returns.” Rather than concentrating on a single security type or issuance, we examine long-run performance following any and all sorts of security issuances. Initial financing events do not associate with underperformance; however subsequent financings do. Our results suggest that negative post-issuance returns have nothing to do with the specific type of security issued, and everything to do with the number of types of securities issued.
Number of Pages in PDF File: 40
Keywords: External Finance, Security Issuance, Long-run Performance
JEL Classification: G30
Date posted: March 18, 2006 ; Last revised: May 12, 2014
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