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A study of Spanish firms' security issue decision under asymmetric information and agency costs

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  • Ruben Arrondo
  • Silvia Gomez-Anson

Abstract

The ability of asymmetric informational models and agency models is analysed to explain the firm's security issue choice and the market reaction to equity and bond issues. The results support mainly agency models as an explanation for the firm's decisions to issue debt or equity, while the market reaction to equity issues is both explained by models of asymmetry of information and agency models. The study also highlights the importance of considering different contexts when analysing capital structure decisions.

Suggested Citation

  • Ruben Arrondo & Silvia Gomez-Anson, 2003. "A study of Spanish firms' security issue decision under asymmetric information and agency costs," Applied Financial Economics, Taylor & Francis Journals, vol. 13(10), pages 771-782.
    • Handle: RePEc:taf:apfiec:v:13:y:2003:i:10:p:771-782
    DOI: 10.1080/09603100210148203
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    Cited by:

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    2. Consuelo Riano & Fco. Javier Ruiz & Rafael Santamaria, 2007. "Determinants of the underpricing of new shares during the subscription period: empirical evidence from the Spanish stock exchange," Applied Financial Economics, Taylor & Francis Journals, vol. 17(7), pages 521-540.

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