Datastream Returns and UK Open Offers

19 Pages Posted: 4 Jun 2008

See all articles by Susanne Espenlaub

Susanne Espenlaub

University of Manchester - Manchester Business School

Abdullah Iqbal

University of Kent, Canterbury

Norman C. Strong

University of Manchester - Alliance Manchester Business School

Date Written: April 1, 2008

Abstract

We report a fundamental error in Datastream equity data for share prices and return indices relating to a failure to make any capital adjustments for UK open offers before February 2002. We re-examine the findings of Iqbal, Espenlaub, and Strong (2008), correcting for this error. We find that the short-run market reaction to open offers is now significantly positive. However, we confirm that long-run post-offer returns continue to be significantly negative up to a four-year horizon and, most importantly, that pre-issue discretionary current accruals predict the long-run underperformance, in support of the earnings management hypothesis. We continue to find no support for the timing hypothesis or the managerial response hypothesis.

Keywords: Datastream returns, earnings management, open offers, SEOs, return performance

JEL Classification: G14, G15, G24, G32

Suggested Citation

Espenlaub, Susanne and Iqbal, Abdullah and Strong, Norman Charles, Datastream Returns and UK Open Offers (April 1, 2008). Available at SSRN: https://ssrn.com/abstract=1140625 or http://dx.doi.org/10.2139/ssrn.1140625

Susanne Espenlaub

University of Manchester - Manchester Business School ( email )

Booth Street West
Manchester, M15 6PB
United Kingdom

Abdullah Iqbal

University of Kent, Canterbury ( email )

Canterbury, Kent CT2 7PE
United Kingdom

Norman Charles Strong (Contact Author)

University of Manchester - Alliance Manchester Business School ( email )

Booth Street West
Manchester, M15 6PB
United Kingdom

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