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Issue Costs and Common Stock Offerings

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  • Robert M. Hull
  • Robert Kershner

Abstract

Prior research of common stock offerings reaches different conclusions concerning the impact of issue costs on stock value. We identify factors that can best explain the different findings - most prominent are the issue costs measure and the listing. We investigate 323 common stock offerings and find that $61 of every $100 fall in stock value can be attributed to issue costs. The respective dollar amounts for the samples of OTC, AMEX, and NYSE firms are $72, $69, and $38. These findings suggest that the collective impact of the negative wealth effects from managerial signaling may be less important than generally assumed.

Suggested Citation

  • Robert M. Hull & Robert Kershner, 1996. "Issue Costs and Common Stock Offerings," Financial Management, Financial Management Association, vol. 25(4), Winter.
  • Handle: RePEc:fma:fmanag:hull96
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    Cited by:

    1. Robert M. Hull & Sungkyu Kwak & Rosemary L. Walker, 2010. "Insider signaling and seasoned equity offerings," Managerial Finance, Emerald Group Publishing, vol. 36(8), pages 703-721, July.

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