Share Price Reaction to Security Offerings by Hospitality Firms

This study examines the market's reaction when hospitality firms announce the issuance of new debt and equity. Results indicate that equity issuance announcements elicit a negative reaction, but no significant reaction is observed with respect to new debt issues. A cross-sectional analysis indicates that announcements by larger firms are more favorably, or less unfavorably, received by the market. The implication is that announcements of new security issues can have a significant impact on firm value under certain conditions