When Do High Stock Returns Trigger Equity Issues?

82 Pages Posted: 21 Mar 2007 Last revised: 31 Mar 2011

See all articles by Aydogan Alti

Aydogan Alti

University of Texas at Austin - Department of Finance

Johan Sulaeman

National University of Singapore (NUS) - Department of Finance

Date Written: March 2011

Abstract

One of the most prominent stylized facts in corporate finance is that equity issues tend to follow periods of high stock returns. We document that firms exhibit such timing behavior only in response to high returns that coincide with strong institutional investor demand. When not accompanied by institutional purchases, stock price increases have little impact on the likelihood of equity issuance. The results highlight the importance of market reception for the timing of equity issues.

JEL Classification: G3

Suggested Citation

Alti, Aydogan and Sulaeman, Johan, When Do High Stock Returns Trigger Equity Issues? (March 2011). AFA 2008 New Orleans Meetings Paper, Available at SSRN: https://ssrn.com/abstract=972223 or http://dx.doi.org/10.2139/ssrn.972223

Aydogan Alti (Contact Author)

University of Texas at Austin - Department of Finance ( email )

Red McCombs School of Business
Austin, TX 78712
United States

Johan Sulaeman

National University of Singapore (NUS) - Department of Finance ( email )

Mochtar Riady Building
15 Kent Ridge Drive
Singapore, 119245
Singapore

HOME PAGE: http://sites.google.com/site/johansulaeman/

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