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

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Title: Reexamine the impact of security offering decisions on equity returns: The multivariate signaling hypothesis
Author(s): Lee, Hei Wai
Doctoral Committee Chair(s): Gentry, James A.
Department / Program: Finance
Discipline: Finance
Degree Granting Institution: University of Illinois at Urbana-Champaign
Degree: Ph.D.
Genre: Dissertation
Subject(s): Economics, Finance
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.
Issue Date: 1989
Type: Text
Language: English
URI: http://hdl.handle.net/2142/19310
Rights Information: Copyright 1989 Lee, Hei Wai
Date Available in IDEALS: 2011-05-07
Identifier in Online Catalog: AAI9010927
OCLC Identifier: (UMI)AAI9010927
 

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