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ANNOUNCEMENT EFFECTS OF WITHDRAWN SECURITY OFFERINGS: EVIDENCE ON THE WEALTH REDISTRIBUTION HYPOTHESIS
Author(s) -
Officer Dennis T.,
Smith Richard L.
Publication year - 1986
Publication title -
journal of financial research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.319
H-Index - 49
eISSN - 1475-6803
pISSN - 0270-2592
DOI - 10.1111/j.1475-6803.1986.tb00453.x
Subject(s) - monetary economics , debt , equity (law) , capital structure , economics , redistribution (election) , stock (firearms) , business , financial economics , finance , mechanical engineering , politics , political science , law , engineering
This paper employs the comparison period returns approach to examine issuance and withdrawal announcement effects for stock portfolios of firms announcing equity or debt issues that are subsequently withdrawn. In contrast to previous literature, which generally attributes financing announcement effects to capital structure changes, the conclusion of this paper is that security price changes at the time an issue is announced or withdrawn prevent wealth redistributions between insiders and outsiders. Empirical findings are inconsistent with the interpretation of announcement effects as capital structure effects.