ANNOUNCEMENT EFFECTS OF WITHDRAWN SECURITY OFFERINGS: EVIDENCE ON THE WEALTH REDISTRIBUTION HYPOTHESIS

This paper employs the comparison period returns approach to examine issuance and withdrawal announcement effects for stock portfolios of firms announcing equity or debt issues that are subsequently withdrawn. In contrast to previous literature, which generally attributes financing announcement effe...

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Bibliographic Details
Published in:The Journal of financial research 1986, Vol.9 (3), p.229-238
Main Authors: Officer, Dennis T., Smith, Richard L.
Format: Article
Language:English
Subjects:
Capital structure
Changes
Portfolio performance
Securities analysis
Stock offerings
Stock prices
Withdrawals
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Summary:This paper employs the comparison period returns approach to examine issuance and withdrawal announcement effects for stock portfolios of firms announcing equity or debt issues that are subsequently withdrawn. In contrast to previous literature, which generally attributes financing announcement effects to capital structure changes, the conclusion of this paper is that security price changes at the time an issue is announced or withdrawn prevent wealth redistributions between insiders and outsiders. Empirical findings are inconsistent with the interpretation of announcement effects as capital structure effects.
ISSN:0270-2592
1475-6803
DOI:10.1111/j.1475-6803.1986.tb00453.x