EQUITY ISSUES AND OFFERING DILUTION G. （股票发行和提供稀释G。）.pdfVIP

Journal of Financial Economics 15 (1986) 61-89. North-Holland EQUITY ISSUES AND OFFERING DILUTION Paul ASQUITH and David W. MULLINS, Jr.* Haruard Unioersrty, Soldten Field, Boston, MA 02163, USA Received November 1983, final version received June 1985 This study investigates the effect on stock prices of seasoned equity offerings. The results demonstrate that the announcement of equity otlerings reduces stock prices significantly. For industrial issues, regression results indicate that announcement day price reduction is significantly and negatively related to the size of the equity offering. The results appear not to be explained by changes in capital structure associated with the equity offerings. The findings are consistent both with the hypothesis that equity issues are viewed by investors as negative signals and with the hypothesis that there is a downward sloping demand for a firm’s shares. 1. Introduction and issues This paper investigates the effect of equity issues on stock prices. An enduring anomaly in financial economics is the reliance of firms on internally generated funds as their chief source of equity financing and their correspond- ing reluctance to issue common stock [Donaldson (1961) Lintner (1960), Sametz (1964)]. This behavior is less anomalous to financial practitioners. Financial executives, investment bankers and many regul