Year: 2021
Type: article
Abstract: More frequent, larger, and more recent debt and equity issues in the prior 3 fiscal years are followed by lower stock returns in the subsequent year. The intercept of a q-factor calendar-time regression for the value-weighted (VW) portfolio of firms with at least 3 large issues is −0.63% per month (t-stat. = −4.31). Purging the factor returns of recent issuers increases the magnitude of the estimated underperformance following frequent equity issues. A VW Fama–MacBeth regression shows that firms with 3 equity issues underperform nonissuers by 0.65% per month (t-stat. = −2.65). Earnings announcement returns are low following frequent issues, especially equity issues.
Authors: Rongbing Huang, Jay R. Ritter
Institutions: Kennesaw State University, University of Florida
Language: English
Subfield: Finance
Domain: Social Sciences
Open Access status: hybrid
Estimated APC paid: $3,255
OpenAlex ID: W3197058993