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Patterns in the Timing of Corporate Event Waves

Posted: 28 Jul 2009 Last revised: 14 Sep 2012

P. Raghavendra Rau

University of Cambridge

Aris Stouraitis

Hong Kong Baptist University (HKBU) - Department of Finance and Decision Sciences

Multiple version iconThere 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

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

P. Raghavendra Rau (Contact Author)

University of Cambridge ( email )

Cambridge Judge Business School
Trumpington Street
Cambridge, Cambridgeshire CB21AG
United Kingdom
3103626793 (Phone)

HOME PAGE: http://www.raghurau.com/

Aristotelis Stouraitis

Hong Kong Baptist University (HKBU) - Department of Finance and Decision Sciences ( email )

Hong Kong

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