University of Illinois Urbana-Champaign

Reexamine the impact of security offering decisions on equity returns: The multivariate signaling hypothesis

Lee, Hei Wai

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Description

Title
Reexamine the impact of security offering decisions on equity returns: The multivariate signaling hypothesis
Author(s)
Lee, Hei Wai
Issue Date
1989
Doctoral Committee Chair(s)
Gentry, James A.
Department of Study
Finance
Discipline
Finance
Degree Granting Institution
University of Illinois at Urbana-Champaign
Degree Name
Ph.D.
Degree Level
Dissertation
Keyword(s)
Economics, Finance
Language
eng
Abstract
  • This thesis reexamines the validity of the informational signaling hypothesis with the security offering announcements of companies. Market, company and offering data are used to test this hypothesis directly by examining the immediate and permanent announcement effects on stock price. For the offering companies, the earnings performance in the post announcement period is also examined. In order to test the conflicting implications of the two sets (univariate versus multivariate) of financing signaling models, offering companies are classified into subsamples according to their firm type (fast growing versus slow growing) and the type of securities offered (common stock, convertible, mortgage and straight debt). This study also looks into price effects of the joint announcements of financing and dividend decisions on common stock.
  • The key objective of the study is to identify the information embodied in the security offering announcements of fast versus slow growing companies, when different types of securities are involved, and whether the offering announcements are accompanied with dividend decisions.
  • The study provides supportive direct evidence for the empirical implications of the univariate signaling hypothesis. The results of the study indicates that security offering announcements are signals of negative information about the value and earnings prospect of the offering companies, especially the fast growing ones.
Type of Resource
text
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http://hdl.handle.net/2142/19310
Copyright and License Information
Copyright 1989 Lee, Hei Wai

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