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The Intra-industry Transfer of Information Inferred from Announcements of Corporate Security Offerings

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  • Szewczyk, Samuel H

Abstract

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 nonannouncing 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 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. Copyright 1992 by American Finance Association.

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  • Szewczyk, Samuel H, 1992. "The Intra-industry Transfer of Information Inferred from Announcements of Corporate Security Offerings," Journal of Finance, American Finance Association, vol. 47(5), pages 1935-1945, December.
    • Handle: RePEc:bla:jfinan:v:47:y:1992:i:5:p:1935-45
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    Cited by:

    1. Scott Besley & Ninon Kohers & Tanja Steigner, 2007. "Private placements of common equity and the industry rival response," Applied Financial Economics, Taylor & Francis Journals, vol. 17(7), pages 559-568.
    2. repec:bla:finmgt:v:36:y:2007:i:2:p:1-21:2 is not listed on IDEAS
    3. Bessler, Wolfgang & Nohel, Tom, 2000. "Asymmetric information, dividend reductions, and contagion effects in bank stock returns," Journal of Banking & Finance, Elsevier, vol. 24(11), pages 1831-1848, November.
    4. Boubakri, Narjess & Cosset, Jean-Claude & Grira, Jocelyn, 2017. "Sovereign wealth funds investment effects on target firms' competitors," Emerging Markets Review, Elsevier, vol. 30(C), pages 96-112.
    5. Aigbe Akhigbe & Jeff Madura & Ann Marie Whyte, 1997. "Intra-Industry Effects Of Bond Rating Adjustments," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 20(4), pages 545-561, December.
    6. Higgins, Eric J. & Mason, Joseph R., 2004. "What is the value of recourse to asset-backed securities? A clinical study of credit card banks," Journal of Banking & Finance, Elsevier, vol. 28(4), pages 875-899, April.
    7. Akhigbe, Aigbe & Johnston, Jarrod & Madura, Jeff, 2006. "Long-term industry performance following IPOs," The Quarterly Review of Economics and Finance, Elsevier, vol. 46(4), pages 638-651, September.
    8. Akhigbe, Aigbe & Martin, Anna D., 2000. "Information-signaling and competitive effects of foreign acquisitions in the US," Journal of Banking & Finance, Elsevier, vol. 24(8), pages 1307-1321, August.
    9. Jeff Madura & Thanh Ngo, 2012. "Re-examination of industry effects due to withdrawn mergers," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 36(3), pages 613-633, July.
    10. Xin Yu & Peng Zhang & Ying Zheng, 2015. "Corporate Governance, Political Connections, and Intra-Industry Effects: Evidence from Corporate Scandals in China," Financial Management, Financial Management Association International, vol. 44(1), pages 49-80, March.
    11. Sinkey, Joseph Jr. & Carter, David A., 1999. "The reaction of bank stock prices to news of derivatives losses by corporate clients," Journal of Banking & Finance, Elsevier, vol. 23(12), pages 1725-1743, December.
    12. Jae Hoon Min, 2020. "Information Spillover and Demand Shock Effect of the IPOs on the Stock Price of the Competitors: Evidence From the Korean Stock Market," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 11(5), pages 1-12, October.
    13. Christian Eckert, 2020. "Risk and risk management of spillover effects: Evidence from the literature," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 23(1), pages 75-104, March.
    14. Hu, May & Tuilautala, Mataiasi & Kang, Yuni, 2019. "Bandwagon effect: Special dividend payments," International Review of Economics & Finance, Elsevier, vol. 63(C), pages 339-363.
    15. Boucher, Carène & Kooli, Maher, 2021. "SEOs: Friendly or threatening game for rivals?," International Review of Economics & Finance, Elsevier, vol. 75(C), pages 130-144.
    16. Bolton, Brian & Lian, Qin & Rupley, Kathleen & Zhao, Jing, 2016. "Industry contagion effects of internal control material weakness disclosures," Advances in accounting, Elsevier, vol. 34(C), pages 27-40.
    17. Ivan E. Brick & Oded Palmon & Dilip K. Patro, 2007. "Stock Price Response to Calls of Convertible Bonds: Still a Puzzle?," Financial Management, Financial Management Association International, vol. 36(2), pages 1-21, July.
    18. Paulo Alves & Peter Pope & Steven Young, 2009. "Cross‐border information transfers: Evidence from profit warnings issued by European firms," Accounting and Business Research, Taylor & Francis Journals, vol. 39(5), pages 449-472.
    19. Iuliia Brushko & Stephen P. Ferris & Jan Hanousek & Jiri Tresl, 2020. "Intra-Industry Transfer of Information Inferred From Trading Volume," CERGE-EI Working Papers wp663, The Center for Economic Research and Graduate Education - Economics Institute, Prague.

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