Skip to main content
Article thumbnail
Location of Repository

Market Gaming? An Examination of Aggregate Equity Issue Clustering

By Michael J. Schill

Abstract

Studies of the long-run returns of equity issues find that the poor performance of new issues is common to non-issuers with similar characteristics. This paper examines the view that such evidence suggests that managers game long-run returns of the total market and their respective industry when timing new equity issues. This form of the timing hypothesis is modeled formally to motivate the empirical tests. Using aggregate new equity offering volume from 1970 to 1993, the empirical evidence in this paper supports some forms of successful gaming of market and industry valuation. In particular, the clustering of equity issue volume of smallcapitalization firms is found to be strongly correlated with subsequent returns of non-issuing, small-capitalization stocks. Industry results suggest that equity offerings appear to also coincide with peaks in the valuation of their respective industries. The economic gains to such timing behavior are highly significant

Year: 2000
OAI identifier: oai:CiteSeerX.psu:10.1.1.134.6829
Provided by: CiteSeerX
Download PDF:
Sorry, we are unable to provide the full text but you may find it at the following location(s):
  • http://citeseerx.ist.psu.edu/v... (external link)
  • http://faculty.darden.virginia... (external link)
  • Suggested articles


    To submit an update or takedown request for this paper, please submit an Update/Correction/Removal Request.