The reaction of security prices to tracking stock announcements |
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Authors: | John Elder Peter Westra |
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Institution: | (1) Department of Economics, Middlebury College, 05753 Middlebury, VT;(2) Deutsche Banc Securities Inc., 31 West 52nd Street, 10019 New York, NY |
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Abstract: | This paper provides some empirical evidence on a relatively new and increasingly prevalent form of equity restructuring called
tracking stock. We identify the effects associated with tracking stock announcements by excluding from our sample those announcement
events that include other significant news announcements on the event date, such as announcements of acquisitions and earnings.
For the 35 announcement events that fit this criteria, we find a mean abnormal return of over 3 percent in the two-day period
surrounding the announced proposal to issue a tracking stock, with 30 of the 35 firms in the sample earning positive abnormal
returns.
The views expressed in this paper are that of the author(s) and do not reflect the views or opinions of Deutsche Bank Securities
Inc. or any of its affiliates. |
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Keywords: | |
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