Issue Costs and Common Stock Offerings

Robert M. Hull and Robert Kershner

Financial Management, 1996, vol. 25, issue 4

Abstract: Prior research of common stock offerings reaches different conclusions concerning the impact of issue costs on stock value. We identify factors that can best explain the different findings - most prominent are the issue costs measure and the listing. We investigate 323 common stock offerings and find that $61 of every $100 fall in stock value can be attributed to issue costs. The respective dollar amounts for the samples of OTC, AMEX, and NYSE firms are $72, $69, and $38. These findings suggest that the collective impact of the negative wealth effects from managerial signaling may be less important than generally assumed.

Date: 1996
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Persistent link: https://EconPapers.repec.org/RePEc:fma:fmanag:hull96

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