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The new issues puzzle: evidence from non-US firms

Author

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  • Turan G. Bali
  • Nusret Cakici
  • Frank J. Fabozzi

Abstract

For non-US stocks of firms in the G7 countries, we empirically test the new issues puzzle -- stocks of firms that issue new equity are, on average, very poor investments relative to various benchmarks -- by market capitalization. Only for the United Kingdom do we find evidence for a significantly negative relation between net share issues and expected returns for larger capitalization stocks. There is some evidence for Japanese stocks. For the other four countries, a positive relation between net share issues and expected returns is observed.

Suggested Citation

  • Turan G. Bali & Nusret Cakici & Frank J. Fabozzi, 2013. "The new issues puzzle: evidence from non-US firms," Applied Economics Letters, Taylor & Francis Journals, vol. 20(17), pages 1586-1591, November.
    • Handle: RePEc:taf:apeclt:v:20:y:2013:i:17:p:1586-1591
    DOI: 10.1080/13504851.2013.829188
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