Patterns in the Timing of Corporate Event Waves
University of Cambridge; UC Berkeley - Haas School of Business
Hong Kong Baptist University (HKBU) - Department of Finance and Decision Sciences
June 1, 2009
Corporate events happen in waves. In this paper, we examine the timing patterns of five different types of corporate event waves (new stock and seasoned equity issues, stock and cash-financed acquisitions, and stock repurchases) using a comprehensive dataset of more than 151,000 corporate transactions over the 25-year period 1980-2004. We document a distinctive pattern, previously undocumented in the literature, in the way stock-related waves form. Corporate waves seem to start with new issue waves (SEO preceding IPO waves), followed by stock-financed merger waves, followed in turn by repurchase waves. Our results hold over separate decades and across industries. Our results seem consistent with both the neoclassical efficiency hypothesis and the misvaluation hypothesis, and there are distinct periods when one or the other appears dominant.
Number of Pages in PDF File: 46
Keywords: merger waves, new issue waves, corporate event cycles, over-reaction, Repurchase waves
JEL Classification: G14, G34, G35working papers series
Date posted: March 8, 2007 ; Last revised: June 10, 2009
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