Can the stock market anticipate future operating performance?: evidence from equity rights issues

R. Kabir and P. Roosenboom
Additional contact information
P. Roosenboom: Tilburg University, Center for Economic Research

No 22, Discussion Paper from Tilburg University, Center for Economic Research

Abstract: This paper examines whether the stock market valuation impact of rights issues is consistent with subsequent operating performance of issuing firms. Analysing a sample of rights issues in the Netherlands, we find that a significant stock price decline takes place with the announcement of rights issues. We then analyse post-rights issue operating performance and find that, consistent with the decline in stock price during the announcement period, issuing firms also exhibit a significant decline in their operating performance. Our analysis thus demonstrates that the stock market can successfully anticipate future changes in operating performance of firms.

JEL-codes: G32 G14 (search for similar items in EconPapers)
Date: Written 2000
View list of references

Downloads: (external link)
http://arno.uvt.nl/show.cgi?fid=4040 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Access Statistics for this paper

More papers in Discussion Paper from Tilburg University, Center for Economic Research
Series data maintained by Corry Stuyts ().