Valuation Effects of New Securities Issuance by Bank Holding Companies: New Evidence |
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Authors: | Paul M Horvitz Insup Lee Kerry L Robertson |
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Institution: | University of Houston, Houston, TX 77204–6282.;University of Delaware, Newark, DE 19716.;Provident Mutual Management, Wilmington, DE 19850. |
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Abstract: | This study examines the announcement impact of bank holding company (BHC) security offerings on shareholder wealth. The results from this study regarding the effects of preferred stock, convertible debt, and straight debt issuances are largely consistent with previous studies. However, in contrast to previous studies pertaining to both BHCs and nonfinancial firms, this study does not find statistically significant negative announcement effects of common stock issues. This particular finding is consistent with the argument that an increase in the capital ratio may have a positive impact on common stock prices of BHCs under certain circumstances. |
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