Abstract

http://ssrn.com/abstract=945471
 
 

Citations (11)



 


 



Security Issue Timing: What Do Managers Know, and When Do They Know it?


Dirk Jenter


Stanford Graduate School of Business; National Bureau of Economic Research (NBER)

Katharina Lewellen


Dartmouth College - Tuck School of Business

Jerold B. Warner


University of Rochester – Simon Business School

July 1, 2007

Simon School Working Paper No. FR 06-12
MIT Sloan Research Paper No. 4654-07
Rock Center for Corporate Governance Working Paper No. 25

Abstract:     
We study put option sales on company stock by large firms. An often cited motivation for these transactions is market timing, and managers’ decision to issue puts should be sensitive to whether the stock is undervalued. We provide new evidence that large firms successfully time security sales. In the 100 days following put option issues, there is roughly a 5% abnormal stock price return, with much of the abnormal return following the first earnings release date after the sale. Direct evidence on put option exercises reinforces these findings: exercise frequencies and payoffs to put holders are abnormally low.

Number of Pages in PDF File: 41

Keywords: corporate pu option sales, marketing timing

JEL Classification: G32, G35

working papers series





Download This Paper

Date posted: November 17, 2006 ; Last revised: December 17, 2009

Suggested Citation

Jenter, Dirk and Lewellen, Katharina and Warner, Jerold B., Security Issue Timing: What Do Managers Know, and When Do They Know it? (July 1, 2007). Simon School Working Paper No. FR 06-12; MIT Sloan Research Paper No. 4654-07; Rock Center for Corporate Governance Working Paper No. 25. Available at SSRN: http://ssrn.com/abstract=945471 or http://dx.doi.org/10.2139/ssrn.945471

Contact Information

Dirk Jenter
Stanford Graduate School of Business ( email )
518 Memorial Way
Stanford, CA 94305-5015
United States
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Katharina Lewellen (Contact Author)
Dartmouth College - Tuck School of Business ( email )
Hanover, NH 03755
United States
603-646-8247 (Phone)
HOME PAGE: http://oracle-www.dartmouth.edu/dart/groucho/tuck_faculty_and_research.faculty_profile?p_id=QE2X25
Jerold B. Warner
University of Rochester – Simon Business School ( email )
Carol Simon Hall 3-160H
Rochester, NY 14627
United States
585-275-2678 (Phone)
585-442-6323 (Fax)
Feedback to SSRN


Paper statistics
Abstract Views: 1,552
Downloads: 315
Download Rank: 51,358
Citations:  11

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo6 in 0.469 seconds