Equity Financing Capacity and Stock Returns: Evidence from China
30 Pages Posted: 27 Jul 2012 Last revised: 8 Mar 2015
Date Written: July 1, 2012
Abstract
We examine the relation between the capacity for financing through rights and seasoned public offers of equity and subsequent stock returns in China. The results show that the capacity for rights and public offers is reliably negatively related with future returns for firms that met regulatory criteria. Further, the capacity for rights offers is strongly negatively related with returns for firms that met the criteria and applied for approval, and for firms that issued equity after meeting the criteria and obtaining approval. Thus, there is clear evidence of a negative relation between equity financing capacity and stock returns in China.
Keywords: Equity financing capacity, stock returns, rights offers, public offers, China
JEL Classification: F3, G12, G15, G32
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Accrual Reliability, Earnings Persistence and Stock Prices
By Scott A. Richardson, Richard G. Sloan, ...
-
Accrued Earnings and Growth: Implications for Earnings Persistence and Market Mispricing
By Patricia M. Fairfield, Scott Whisenant, ...
-
Insider Trading, Earnings Quality, and Accrual Mispricing
By Mark E. Vargus and Messod D. Beneish
-
Inventory Changes and Future Returns
By Jacob K. Thomas and Huai Zhang
-
Why is the Accrual Anomaly Not Arbitraged Away?
By Christina A. Mashruwala, Shivaram Rajgopal, ...
-
Value-Glamour and Accruals Mispricing: One Anomaly or Two?
By Hemang Desai, Shivaram Rajgopal, ...
-
Accruals and Future Stock Returns: Tests of the Naive Investor Hypothesis
By Ashiq Ali, Lee-seok Hwang, ...
-
The Implications of Accounting Distortions and Growth for Accruals and Profitability
By Scott A. Richardson, Richard G. Sloan, ...
-
By Patricia Dechow and Weili Ge
-
By Patricia M. Fairfield, Scott Whisenant, ...