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Frequent issuers' influence on long-run post-issuance returns

  • Billett, Matthew T.
  • Flannery, Mark J.
  • Garfinkel, Jon A.

Prior studies conclude that firms' equity underperforms following many individual sorts of external financing. These conclusions naturally raise significant questions about market efficiency and/or about the techniques used to measure long-run "abnormal returns." Rather than concentrating on a single security type or issuance, we examine long-run performance following any and all sorts of security issuances. Initial financing events do not associate with underperformance; however, subsequent financings do. Our results suggest that negative post-issuance returns have nothing to do with the specific type of security issued, and everything to do with the number of types of securities issued.

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File URL: http://www.sciencedirect.com/science/article/B6VBX-514BPP2-3/2/4933a4c707a8c3d80e21c4e5385940da
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Article provided by Elsevier in its journal Journal of Financial Economics.

Volume (Year): 99 (2011)
Issue (Month): 2 (February)
Pages: 349-364

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Handle: RePEc:eee:jfinec:v:99:y:2011:i:2:p:349-364
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505576

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