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    Market reaction to seasoned offerings in China

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    Akbar_Journal_of_Business_Finance_&_Accounting.pdf (352.2Kb)
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    Publication date
    2016-06
    Author
    Liu, J.
    Akbar, Saeed
    Shah, S.Z.A.
    Zhang, D.
    Pang, D.
    Keyword
    Seasoned issues
    Seasoned equity offerings
    Convertible bond issues
    Market reaction
    Information
    Information asymmetry
    Agency costs
    Market infrastructure
    China
    G12
    G14
    G32
    G30
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    Rights
    © 2016 The Authors Journal of Business Finance & Accounting Published by John Wiley & Sons Ltd. This is an open access article under the terms of the Creative Commons Attribution License, which permits use, distribution and reproduction in any medium, provided the original work is properly cited.
    Peer-Reviewed
    Yes
    
    Metadata
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    Abstract
    This 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.
    URI
    http://hdl.handle.net/10454/17130
    Version
    Published version
    Citation
    Liu J, Akbar S, Shah SZA et al (2016) Market reaction to seasoned offerings in China. Journal of Business Finance & Accounting. 43(5-6): 597-653.
    Link to publisher’s version
    https://doi.org/10.1111/jbfa.12198
    Type
    Article
    Collections
    Management and Law Publications

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