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Corporate Decisions, Information and Prices: Do Managers Move Prices or Do Prices Move Managers?
Author(s) -
Giammarino Ronald,
Heinkel Robert,
Hollifield Burton,
Li Kai
Publication year - 2004
Publication title -
economic notes
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.274
H-Index - 19
eISSN - 1468-0300
pISSN - 0391-5026
DOI - 10.1111/j.0391-5026.2004.00126.x
Subject(s) - equity (law) , insider , business , insider trading , information asymmetry , financial economics , finance , economics , political science , law
Seasoned equity offerings involve two significant events: registration followed by the decision to complete the issue or withdraw the registration. We present an empirical analysis of the interaction between seasoned equity issues, insider trading and the incorporation of information in prices around these two events. We find that the manager moves prices through corporate decisions but not personal ones. Specifically, the market reacts to the registration and the registration triggers information acquisition by the market, which is shown to influence the manager's final decision. Trading by managers during this interval does not, however, move prices.(J.E.L.: G14, G23, G32) .