Equity financing capacity and stock returns: Evidence from China

Meimanage Fonseka, Lalith P. Samarakoon and Gao-Liang Tian

Journal of International Financial Markets, Institutions and Money, 2012, vol. 22, issue 5, 1277-1291

Abstract: We examine the relation between the capacity for financing through rights and seasoned public offers of equity and subsequent stock returns in China. The results show that the capacity for rights and public offers is reliably negatively related with future returns for firms that met regulatory criteria. Further, the capacity for rights offers is strongly negatively related with returns for firms that met the criteria and applied for approval, and for firms that issued equity after meeting the criteria and obtaining approval. Thus, there is clear evidence of a negative relation between equity financing capacity and stock returns in China.

Keywords: Equity financing capacity; Stock returns; Rights offers; Public offers; China (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:intfin:v:22:y:2012:i:5:p:1277-1291

DOI: 10.1016/j.intfin.2012.07.004

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