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THE VALUATION EFFECTS OF FREQUENT COMMON STOCK ISSUANCES
Author(s) -
McDaniel Wm R,
Madura Jeff,
Akhigbe Aigbe
Publication year - 1994
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.1475-6803.1994.tb00202.x
Subject(s) - issuer , common stock , valuation effects , business , equity (law) , shareholder , stock (firearms) , valuation (finance) , empirical evidence , stock market , monetary economics , economics , accounting , finance , corporate governance , geography , philosophy , context (archaeology) , epistemology , political science , law , archaeology
Previous empirical studies show that announcements of seasoned common stock registrations and issuances lead to significant reductions in common stock prices and shareholder wealth. Nevertheless, some firms issue common stock frequently. Our empirical study of nonutility firms that issued common stock four or more times within ten years shows that market reactions to announcements of offerings and to registrations are less unfavorable than typical reactions for infrequent issuers. A cross‐sectional analysis reveals no unique characteristics that distinguish frequent issuers from one‐time common equity issuers. In fact, the only detectable characteristic unique to the firms is that they issue common stock frequently.