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Frequent Issuers' Influence on Long-Run Post-Issuance Returns

40 Pages Posted: 18 Mar 2006 Last revised: 12 May 2014

Matthew T. Billett

Indiana University - Kelley School of Business - Department of Finance

Mark J. Flannery

University of Florida - Department of Finance, Insurance and Real Estate

Jon A. Garfinkel

University of Iowa - Tippie College of Business

Date Written: April 29, 2010

Abstract

Prior studies conclude that firms’ equity underperforms following many individual sorts of external financing. These conclusions naturally raise significant questions about market efficiency and/or about the techniques used to measure long run “abnormal returns.” Rather than concentrating on a single security type or issuance, we examine long-run performance following any and all sorts of security issuances. Initial financing events do not associate with underperformance; however subsequent financings do. Our results suggest that negative post-issuance returns have nothing to do with the specific type of security issued, and everything to do with the number of types of securities issued.

Keywords: External Finance, Security Issuance, Long-run Performance

JEL Classification: G30

Suggested Citation

Billett, Matthew T. and Flannery , Mark J. and Garfinkel, Jon A., Frequent Issuers' Influence on Long-Run Post-Issuance Returns (April 29, 2010). Journal of Financial Economics (JFE), Forthcoming. Available at SSRN: https://ssrn.com/abstract=891484 or http://dx.doi.org/10.2139/ssrn.891484

Matthew Billett

Indiana University - Kelley School of Business - Department of Finance ( email )

1309 E. 10th St.
Bloomington, IN 47405
United States
812-855-3366 (Phone)

Mark Flannery

University of Florida - Department of Finance, Insurance and Real Estate ( email )

P.O. Box 117168
Gainesville, FL 32611
United States
352-392-3184 (Phone)
352-392-0103 (Fax)

Jon Garfinkel (Contact Author)

University of Iowa - Tippie College of Business ( email )

108 PBB
Iowa City, IA 52242-1000
United States
319-335-0943 (Phone)
319-335-3690 (Fax)

HOME PAGE: http://www.biz.uiowa.edu/faculty/jgarfinkel

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