Abstract
Purpose – This paper aims to investigate whether completed vs withdrawn equity offerings result in
different stock price performance prior to announcement and between announcement and withdrawal
or completion.
Design/methodology/approach – Investigates stock price performance prior to equity offerings
announcements and between the announcement and actual completion or withdrawal. Stock price
performance is measured by cumulative abnormal returns (CARs).
Findings – It was found that stock price performance is strong only for firms that later complete the
offerings. Firms that withdraw their offerings have poor stock price performance even before the
announcement. Additionally, it was found that stock price performance for both the completed and
the withdrawn offerings is poor after the announcement. Contrasting with prior research, the results
show that firms complete their equity offerings, even though their stock price performance
deteriorates. The fact that this deterioration is significantly smaller (approximately one-third) than
that of withdrawn offerings indicates that there is an acceptable level of deterioration that firms
tolerate.
Originality/value – The paper evaluates short-run stock price performance for a number of firms in
the period 1984-2000
different stock price performance prior to announcement and between announcement and withdrawal
or completion.
Design/methodology/approach – Investigates stock price performance prior to equity offerings
announcements and between the announcement and actual completion or withdrawal. Stock price
performance is measured by cumulative abnormal returns (CARs).
Findings – It was found that stock price performance is strong only for firms that later complete the
offerings. Firms that withdraw their offerings have poor stock price performance even before the
announcement. Additionally, it was found that stock price performance for both the completed and
the withdrawn offerings is poor after the announcement. Contrasting with prior research, the results
show that firms complete their equity offerings, even though their stock price performance
deteriorates. The fact that this deterioration is significantly smaller (approximately one-third) than
that of withdrawn offerings indicates that there is an acceptable level of deterioration that firms
tolerate.
Originality/value – The paper evaluates short-run stock price performance for a number of firms in
the period 1984-2000
Original language | English |
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Pages (from-to) | 234-246 |
Number of pages | 13 |
Journal | Managerial Finance |
Volume | 32 |
Issue number | 3 |
DOIs | |
Publication status | Published - 1 Mar 2006 |
Externally published | Yes |
Keywords
- Equity capital
- Stock prices