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The Intra‐Industry Transfer of Information Inferred from Announcements of Corporate Security Offerings
Author(s) -
SZEWCZYK SAMUEL H.
Publication year - 1992
Publication title -
the journal of finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 18.151
H-Index - 299
eISSN - 1540-6261
pISSN - 0022-1082
DOI - 10.1111/j.1540-6261.1992.tb04689.x
Subject(s) - business , valuation effects , debt , valuation (finance) , monetary economics , stock (firearms) , public offering , capital expenditure , share price , finance , economics , initial public offering , stock exchange , mechanical engineering , engineering
This study investigates the extent to which information inferred by investors from initial announcements of corporate security offerings affects share prices in the capital markets. The empirical tests measure the response in the common stock prices of both firms announcing a security offering and non‐announcing firms operating in the same industry. Small but significantly negative abnormal returns are shown by industry shares upon initial announcements of common stock, convertible debt, and straight debt public offerings. Such an industry response indicates that share prices incorporate an inside assessment of factors relevant to the valuation of an industry subset of firms.