IDEAS home Printed from https://ideas.repec.org/a/cup/jfinqa/v29y1994i03p351-377_00.html
   My bibliography  Save this article

Corporate Financing Decisions and Anonymous Trading

Author

Listed:
  • Giammarino, Ronald
  • Heinkel, Robert
  • Hollifield, Burton

Abstract

This study considers a model in which a corporate manager has private information and engages in i) anonymous trading on personal account in the secondary market, and ii) the corporate issuance of new shares in the primary market. The paper examines the equilibrium tradeoff of insider trading profits against the manager's share of the corporate consequences of the primary issue. In the resulting equilibrium, managers, acting in their own best interests, seem to behave according to differing objective functions. In some cases, they seem to maximize intrinsic value, in others, insider trading profits seem to dominate, and still others seem to be concerned with both. Hence, the presence of anonymous trading around corporate financings brings into question the use of corporate objective functions with exogenously fixed weights.

Suggested Citation

  • Giammarino, Ronald & Heinkel, Robert & Hollifield, Burton, 1994. "Corporate Financing Decisions and Anonymous Trading," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 29(3), pages 351-377, September.
    • Handle: RePEc:cup:jfinqa:v:29:y:1994:i:03:p:351-377_00
    as

    Download full text from publisher

    File URL: https://www.cambridge.org/core/product/identifier/S002210900000898X/type/journal_article
    File Function: link to article abstract page
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ang, James S. & Brau, James C., 2003. "Concealing and confounding adverse signals: insider wealth-maximizing behavior in the IPO process," Journal of Financial Economics, Elsevier, vol. 67(1), pages 149-172, January.
    2. Francesca Cornelli & David D. Li, "undated". "Risk Arbitrage in Takeovers," Rodney L. White Center for Financial Research Working Papers 17-98, Wharton School Rodney L. White Center for Financial Research.
    3. Cornelli, Francesca & Li, David Daokui, 1998. "Risk Arbitrage in Takeovers," CEPR Discussion Papers 2026, C.E.P.R. Discussion Papers.
    4. Kenneth A. Carow & Steven R. Cox & Dianne M. Roden, 2007. "The Role of Insider Influence in Mutual‐to‐Stock Conversions," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 39(6), pages 1285-1304, September.
    5. Esther B. Del Brio & Javier Perote & Julio Pindado, 2003. "Measuring the Impact of Corporate Investment Announcements on Share Prices: The Spanish Experience," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 30(5‐6), pages 715-747, June.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cup:jfinqa:v:29:y:1994:i:03:p:351-377_00. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Kirk Stebbing (email available below). General contact details of provider: https://www.cambridge.org/jfq .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.