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Valuation Effects of New Securities Issuance by Bank Holding Companies: New Evidence

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  • Horvitz, Paul M
  • Lee, Insup
  • Robertson, Kerry L

Abstract

This study examines the announcement impact of bank holding company 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 bank holding companies 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 bank holding companies under certain circumstances. Copyright 1991 by MIT Press.

Suggested Citation

  • Horvitz, Paul M & Lee, Insup & Robertson, Kerry L, 1991. "Valuation Effects of New Securities Issuance by Bank Holding Companies: New Evidence," The Financial Review, Eastern Finance Association, vol. 26(1), pages 91-104, February.
  • Handle: RePEc:bla:finrev:v:26:y:1991:i:1:p:91-104
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    Cited by:

    1. Bessler, Wolfgang & Nohel, Tom, 1996. "The stock-market reaction to dividend cuts and omissions by commercial banks," Journal of Banking & Finance, Elsevier, vol. 20(9), pages 1485-1508, November.
    2. Dahl, Drew & Spivey, Michael F., 1996. "The effects of declining capitalization on equity acquisition by commercial banks," Journal of Banking & Finance, Elsevier, vol. 20(5), pages 901-915, June.
    3. Lamont K. Black & Ioannis Floros & Rajdeep Sengupta, 2016. "Raising capital when the going gets tough: U.S. bank equity issuance from 2001 to 2014," Research Working Paper RWP 16-5, Federal Reserve Bank of Kansas City.
    4. Keith D. Harvey & M. Cary Collins & James W. Wansley, 2003. "The Impact of Trustā€Preferred Issuance on Bank Default Risk and Cash Flow: Evidence from the Debt and Equity Securities Markets," The Financial Review, Eastern Finance Association, vol. 38(2), pages 235-256, May.

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