Information Transfers across Same–Sector Funds When Closed–End Funds Issue Equity

This study examines the reaction of non–issuing, same–sector funds when a closed–end fund announces a seasoned equity offering. The non–issuing, same–sector funds have a significant, negative announcement–day abnormal return. The abnormal returns for U.S. debt funds are less negative than U.S. equity and international debt funds. The abnormal returns for international debt funds are more negative than international equity funds. Announcement–day abnormal returns are directly related to the announcement–day abnormal return of the issuing fund and the premium/discount of the issuing fund. Announcement–day abnormal returns are inversely related to the premium/discount of the non–issuing, same–sector funds.