Show simple item record

dc.contributor.authorElliott, Williamen_NZ
dc.contributor.authorPrevost, Andrew Ken_NZ
dc.contributor.authorRao, Ramesh Pen_NZ
dc.date.available2011-04-07T03:18:48Z
dc.date.copyright2004-08-13en_NZ
dc.identifier.citationElliott, W., Prevost, A. K., & Rao, R. P. (2004, August 13). The announcement impact of seasoned equity offerings on bondholder wealth. University of Otago Department of Finance Seminar Series.en
dc.identifier.urihttp://hdl.handle.net/10523/1499
dc.description.abstractPrevious studies document a negative and significant return to equity on the announcement of a seasoned equity offering. However, the effects of such an announcement on the firms other securities has received little attention. Using a sample of seasoned equity offerings made between 1980 and 2000 we analyze the effects of an SEO on the firm’s bondholders. We find, on average, that bondholders enjoy a significantly positive return on the announcement of an SEO. This result is more pronounced for bonds with longer maturities and for bonds with lower bond ratings. We interpret these results as evidence in favor of the unanticipated leverage change hypothesis and the wealth transfer hypothesis. The results are inconsistent with the information-signaling hypothesis for SEOs. We also find strong evidence of a negative relationship between dollar losses to shareholders and dollar gains to bondholders. We interpret this as additional evidence that, at least in the case of SEOs, that the wealth transfer hypothesis best describes the data.en_NZ
dc.format.mimetypeapplication/pdf
dc.relation.ispartofUniversity of Otago Department of Finance Seminar Seriesen_NZ
dc.relation.urihttp://www.business.otago.ac.nz/finc/research/seminars_04.htmlen_NZ
dc.subjectseasoned equity offeringen_NZ
dc.subjectfirm’s bondholdersen_NZ
dc.subjectunanticipated leverage change hypothesisen_NZ
dc.subjectwealth transfer hypothesisen_NZ
dc.subjectinformation-signaling hypothesisen_NZ
dc.subject.lcshHF Commerceen_NZ
dc.subject.lcshHF5601 Accountingen_NZ
dc.subject.lcshHG Financeen_NZ
dc.titleThe announcement impact of seasoned equity offerings on bondholder wealthen_NZ
dc.typeConference or Workshop Item (Seminar, Speech or Other Presentation)en_NZ
dc.description.versionUnpublisheden_NZ
otago.bitstream.pages29en_NZ
otago.date.accession2007-04-12en_NZ
otago.schoolFinanceen_NZ
otago.openaccessOpen
otago.place.publicationDunedin, New Zealanden_NZ
dc.identifier.eprints621en_NZ
dc.description.refereedNon Peer Revieweden_NZ
otago.school.eprintsFinance & Quantitative Analysisen_NZ
dc.description.referencesAsquith, P. and D. Mullins, Jr., 1986, Signaling with dividends, stock repurchases, and equity issues, Financial Management 15(3), 27-44. Brous, P., 1992, Common stock offerings and earnings expectations: A test of the release of unfavorable information, Journal of Finance 47, 1517-1536. Brown, S. and J. Warner, 1980, Measuring security price performance, Journal of Financial Economics 8, 205-258. Brown, S. and J. Warner, 1985, Using daily stock returns: The case of event studies, Journal of Financial Economics 14, 3-31. Corrado, C., 1989, A non-parametric test for abnormal security-price performance in event studies, Journal of Financial Economics 23 (August), 385-395. Cowan, A., 1992, Nonparametric event study tests. Review of Quantitative Finance and Accounting 2 (Winter): 343-358. Denis, D., 1991, Shelf registration and the market for seasoned equity offerings, Journal of Business 64(2), 189-212. Eberhart, A. and A. Siddique, 2002, The long-term performance of corporate bonds (and stocks) following seasoned equity offerings, The Review of Financial Studies 15(5) (Winter), 1385-1406. Eckbo, B.E. and R. Masulis, 1995, Seasoned equity offerings: a survey. In: Jarrow, R.A. and V.M.W.T. Ziemba (Eds.), Finance, Handbooks in Operations Research and Management Science, Vol. 9, North-Holland, Amsterdam, 1017-1072 (Chapter 31). Eckbo B.E. and R. Masulis and O. Norli , 2000, Seasoned public offerings: resolution of the ‘new issues puzzle’, Journal of Financial Economics 56, 251-291. Handjinicolaou, G. and A. Kalay, 1984, Wealth redistributions or changes in firm value: An analysis of returns to bondholders and stockholders around dividend announcements, Journal of Financial Economics 13, 35-63. Hansen, R. and C. Crutchley, 1990, Corporate earnings and financing: An empricial analysis, Journal of Business 63, 347-371. Healy, P. and K. Palepu, 1990, Earnings and risk changes surrounding primary stock offers, Journal of Accounting Research 28, 25-48. Jain, P., 1992, Equity issues and changes in expectations of earnings by financial analysts, Review of Financial Studies 5, 669-683. Jayaraman, N. and K. Shastri, 1988, The valuation impacts of specially designated dividends, Journal of Financial and Quantitative Analysis 23(3), 301-312. Jensen, M. and W. Meckling, 1976, Theory of the firm: managerial behavior, agency costs, and ownership, Journal of Financial Economics 3(4), 305-360. Kalay, A. and A. Shimrat, 1987, Firm value and seasoned equity issues: Price pressure, wealth redistribution or negative information, Journal of Financial Economics 19(1), 109-126. Loughran, T. and J.R. Ritter, 1997, The operating performance of firms conducting seasoned equity offerings, The Journal of Finance 52(5)(December), 1823-1850. Loughran, T. and J.R. Ritter, 1995, The new issues puzzle, Journal of Finance 50, 23-51. Masulis, R., 1980, The effects of capital structure change on security prices: A study of exchange offers, Journal of Financial Economics 8(2), 139-177. Masulis, R. and A. Korwar, 1986, Seasoned equity offerings: An empirical investigation, Journal of Financial Economics 15, 91-118. Maxwell, W.F. and R.P. Rao, 2003, Do spinoffs expropriate wealth from bondholders?, Journal of Finance 58(5) (October), 2087-2109. Maxwell, W.F. and C. Stephens, 2003, The wealth effects of repurchases on bondholders, Journal of Finance 58(2)(April), 895-919. Mikkelson, W. and M. Parch, 1986, Valuation effects of security offerings and the issuance process, Journal of Financial Economics 15, 31-60. Miller, M. H. and K. Rock, 1985, Dividend policy under asymmetric information, Journal of Finance 40(4), 1031-1051. Myers, S. and N. Majluf, 1984, Corporate financing and investment decisions when firms have information that investors do not have, Journal of Financial Economics 13, 187-221. Spiess, K. and J. Affleck-Graves, 1995, Underperformance in long-run stock returns following seasoned equity offerings, Journal of Financial Economics 38, 243-267. Warga, A. and I. Welch, 1993, Bondholder losses in leveraged buyouts, Review of Financial Studies 6, 959-982.en_NZ
 Find in your library

Files in this item

Thumbnail

This item appears in the following Collection(s)

Show simple item record