The new issues puzzle: evidence from non-US firms

Turan G. Bali, Nusret Cakici and Frank Fabozzi ()

Applied Economics Letters, 2013, vol. 20, issue 17, 1586-1591

Abstract: For non-US stocks of firms in the G7 countries, we empirically test the new issues puzzle -- stocks of firms that issue new equity are, on average, very poor investments relative to various benchmarks -- by market capitalization. Only for the United Kingdom do we find evidence for a significantly negative relation between net share issues and expected returns for larger capitalization stocks. There is some evidence for Japanese stocks. For the other four countries, a positive relation between net share issues and expected returns is observed.

Date: 2013
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DOI: 10.1080/13504851.2013.829188

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