Controlling shareholders and market timing in share issuance

Borja Larrain () and Francisco Urzúa I.
Authors registered in the RePEc Author Service: Francisco Urzúa I.

Journal of Financial Economics, 2013, vol. 109, issue 3, 661-681

Abstract: We examine market timing in the equity issuance of firms controlled by large shareholders using a hand-collected data set of controlling shareholders' ownership stakes in Chile between 1990 and 2009. When a firm issues shares, the controlling shareholder can either maintain or change his ownership stake depending on how many of the new shares he subscribes. Issuance predicts poor future returns and is preceded by high returns, but only when the controlling shareholder's stake is significantly reduced. Consistent with market timing, the results are stronger in the absence of institutional investors and in hot issuance markets.

Keywords: Controlling shareholders; Issuance; Market timing; Ownership (search for similar items in EconPapers)
JEL-codes: G14 G32 G34 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (12)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:109:y:2013:i:3:p:661-681

DOI: 10.1016/j.jfineco.2013.03.013

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