The underreaction hypothesis and the new issue puzzle: evidence from Japan

Authors: Stulz R.1; Kang J.; Kim Y.

Source: Review of Financial Studies, Volume 12, Number 3, 1999 , pp. 519-534(16)

Publisher: Oxford University Press

Key:
Free Content - Free Content
New Content - New Content
Subscribed Content - Subscribed Content
Free Trial Content - Free Trial Content

Abstract:

This article investigates the long-term equity performance of Japanese firms issuing convertible debt and equity. We find that issuing firms perform poorly (except for equity rights issues) compared to nonissuing firms even though the stock-price reaction to convertible debt and equity issues is not negative for Japanese firms. This underperformance is strongest for firms issuing public convertible debt. In contrast to the United States, poor performance is not concentrated in smaller firms and in firms with a high market-to-book ratio. Simple behavioral explanations advanced for the new issue puzzle in the United States do not seem consistent with the Japanese experience.

Document Type: Original article

Affiliations: Michigan State University, USA Clemson University, SC, USA : 1: Corresponding author at: Fisher College of Business, Ohio State University, 2100 Neil Avenue, Columbus, OH 43210-1399, USA

The full text electronic article is available for purchase. You will be able to download the full text electronic article after payment.

$30.59 plus tax

 

OR

Back to top

Key:
Free Content - Free Content
New Content - New Content
Subscribed Content - Subscribed Content
Free Trial Content - Free Trial Content
Page Help Click here for Page Help
Shopping cart
Tools
Sign in






Need to register?
Sign up here
Text size: A | A | A | A