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Valuation Effects of New Securities Issuance by Bank Holding Companies: New Evidence
Author(s) -
Horvitz Paul M.,
Lee Insup,
Robertson Kerry L.
Publication year - 1991
Publication title -
financial review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.621
H-Index - 47
eISSN - 1540-6288
pISSN - 0732-8516
DOI - 10.1111/j.1540-6288.1991.tb00371.x
Subject(s) - business , shareholder , monetary economics , stock (firearms) , valuation (finance) , debt , valuation effects , common stock , convertible , hybrid security , financial system , capital structure , accounting , finance , economics , investment banking , corporate governance , private placement , mechanical engineering , paleontology , context (archaeology) , structural engineering , engineering , biology
This study examines the announcement impact of bank holding company (BHC) security offerings on shareholder wealth. The results from this study regarding the effects of preferred stock, convertible debt, and straight debt issuances are largely consistent with previous studies. However, in contrast to previous studies pertaining to both BHCs and nonfinancial firms, this study does not find statistically significant negative announcement effects of common stock issues. This particular finding is consistent with the argument that an increase in the capital ratio may have a positive impact on common stock prices of BHCs under certain circumstances.