Changes in Management Ownership and the Valuation Effects of Equity Offerings

Marco Bigelli, Vikas Mehrotra, Randall Morck and Wayne Yu

Journal of Management & Governance, 1998, vol. 2, issue 4, 297-309

Abstract: Seasoned equity issues trigger share price declines, and this is usually interpreted as evidence of signalling. We find that seasoned equity issues also typically result in much lower managerial ownership in U.S. firms. Jensen and Meckling (1976) predict a stock price decline when managerial ownership falls. We conduct several tests to distinguish agency explanations form signalling explanations, and conclude that both effects are present. Copyright Kluwer Academic Publishers 1998

Date: 1998
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DOI: 10.1023/A:1009963405008

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