Capitalisation Changes and Share Price Movements: New Zealand Evidence

D. M. Emanuel
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D. M. Emanuel: University of Auckland. This paper has benefitted from the helpful comments and ideas of Philip Brown, Frank Finn and Maurice Joy. This paper was prepared while the author was a visitor at the Australian Graduate School of Management.

Australian Journal of Management, 1979, vol. 4, issue 2, 97-104

Abstract: This paper examines the reaction of prices on the New Zealand Stock Exchange to the announcement of two classes of capitalisation change: bonus issues and rights issues. The reaction is rapid and unbiased. Capitalisation changes are almost always accompanied by effective dividend increases, which can be interpreted as proxies for relevant parameters of firms' probability distributions of future cash flows. The evidence is consistent with capital market efficiency.

Keywords: BONUS ISSUE; DIVIDENDS; EFFICIENT CAPITAL MARKETS; NEW ZEALAND STOCK EXCHANGE; RIGHTS ISSUE (search for similar items in EconPapers)
Date: 1979
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Persistent link: https://EconPapers.repec.org/RePEc:sae:ausman:v:4:y:1979:i:2:p:97-104

DOI: 10.1177/031289627900400202

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