Patterns in the Timing of Corporate Event Waves
Posted: 28 Jul 2009
Last revised: 14 Sep 2012
University of Cambridge
Hong Kong Baptist University (HKBU) - Department of Finance and Decision Sciences
There are 2 versions of this paper
Date Written: July 28, 2009
Abstract
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-inanced 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.
Keywords: Merger waves, New issue waves, Repurchase waves, Corporate event cycles
JEL Classification: G14, G34, G35
Suggested Citation:
Suggested Citation
Rau, P. Raghavendra and Stouraitis, Aris, Patterns in the Timing of Corporate Event Waves (July 28, 2009). Journal of Financial and Quantitative Analysis (JFQA), 46(1), 209-246, 2011. Available at SSRN: https://ssrn.com/abstract=1439938
