AffiliationUniversity of Salford
University of Liverpool
University of Warwick
Southwestern University of Finance and Economics, China
University of Bedfordshire
convertible bond issues
seasoned equity offerings
N120 International Business studies
MetadataShow full item record
AbstractThis study examines stock market reaction to the announcement of various forms of seasoned issues in China. Our empirical evidence demonstrates that market reactions differ in ways that suggest a difference between management's internal assessment and the market's assessment of the stock price. The market responds unfavourably to the announcement, notably in the case of rights issues and also with regard to open offers. Private placements experience an unfavourable pre-announcement reaction, which contrasts with the favourable reaction after the event. Convertible bond issues generate positive excess returns consistent with the market's confidence that they can help to align management and shareholders’ interests. Further investigation shows that market reaction is related to factors specific to the issuer and issue by reference to the period immediately surrounding the issue. Specifically, ownership concentration, agency matters connected with equity offerings, investor protection connected with fund allocation and security pricing, and the influence of powerful moneyed interests together provide an instructive insight into market reaction. Institutional inefficiency pertaining to underwriting, auditing, analysts’ forecasts and credit ratings are found to have a weak association with market price, consistent with due public scepticism concerning management and their gatekeepers.
CitationLiu J., Akbar S., Shah S., Zhang D., Pang D. (2016) 'Market reaction to seasoned offerings in China', Journal of Business Finance and Accounting, 43, pp.597-653.
PublisherBlackwell Publishing Ltd
The following license files are associated with this item:
- Creative Commons
Except where otherwise noted, this item's license is described as Yellow - can archive pre-print (ie pre-refereeing)