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Prior studies have documented that firms' operating performance deteriorates following seasoned equity offerings (SEOs). This paper proposes and empirically tests the hypothesis that the poor performance is caused by managers' overinvestment. I show that, subsequent to the offering, SEO firms...
Persistent link: https://www.econbiz.de/10012751775
Theory and recent evidence suggest that overvalued firms can create value for shareholders if they exploit their overvaluation by using their stock as currency to purchase less overvalued firms. We challenge this idea and show that, in practice, overvalued acquirers significantly overpay for...
Persistent link: https://www.econbiz.de/10012708557
Theories such as Merton (1987, Journal of Finance) predict a positive relation between idiosyncratic risk and expected return when investors do not diversify their portfolio. Ang, Hodrick, Xing, and Zhang (2006, Journal of Finance 61, 259-299) however find that monthly stock returns are...
Persistent link: https://www.econbiz.de/10012754550
Theories such as Merton [1987. A simple model of capital market equilibrium with incomplete information. Journal of Finance 42, 483-510] predict a positive relation between idiosyncratic risk and expected return when investors do not diversify their portfolio. Ang, Hodrick, Xing, and Zhang...
Persistent link: https://www.econbiz.de/10005376795
"Prior studies have documented that firms' operating performance deteriorates following seasoned equity offerings (SEOs). This paper proposes and empirically tests the hypothesis that this poor performance is the result of managers' overinvestment. I find that, subsequent to the offering, SEO...
Persistent link: https://www.econbiz.de/10008676246
Theory and recent evidence suggest that overvalued firms can create value for shareholders if they exploit their overvaluation by using their stock as currency to purchase less overvalued firms. We challenge this idea and show that, in practice, overvalued acquirers significantly overpay for...
Persistent link: https://www.econbiz.de/10010665563
Persistent link: https://www.econbiz.de/10010122967
Persistent link: https://www.econbiz.de/10008160121
Persistent link: https://www.econbiz.de/10008398796
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