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When do high stock returns trigger equity issues?

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  • Altı, Aydoğan
  • Sulaeman, Johan

Abstract

One of the most prominent stylized facts in corporate finance is that equity issues tend to follow periods of high stock returns. We document that firms exhibit such timing behavior only in response to high returns that coincide with strong institutional investor demand. When not accompanied by institutional purchases, stock price increases have little impact on the likelihood of equity issuance. The results highlight the importance of market reception for the timing of equity issues.

Suggested Citation

  • Altı, Aydoğan & Sulaeman, Johan, 2012. "When do high stock returns trigger equity issues?," Journal of Financial Economics, Elsevier, vol. 103(1), pages 61-87.
    • Handle: RePEc:eee:jfinec:v:103:y:2012:i:1:p:61-87
    DOI: 10.1016/j.jfineco.2011.08.007
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    More about this item

    Keywords

    Market timing; Seasoned equity offerings; Institutional investors;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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