We distinguish among the signaling, free cash flow, and wealth transfer hypotheses in explaining the stock price reaction to specially designated dividend (SDD) announcements. In a direct test of the signaling power of SDDs, we find both a larger stock price reaction and a significant upward...

Previous research documents significant abnormal net selling by insiders prior to seasoned equity offering announcements. This study documents that the abnormal net selling is significantly greater for growth firms than for mature firms. It also shows that growth firms experience poorer...

This study demonstrates that a plant closing announcement provides information not just for the plant being closed but also for other operations and the firm as a whole. An examination of changes in firm financial condition following the announcement indicates problems that are firm-wide, not...

We develop a mathematical proof demonstrating that only financially-strong firms will sell put options on their own stock, but financially-weak firms will not. The sale of options on a company's own stock exposes the buyer to default risk of the issuer, which additionally complicates the payoff...

Traditional target structure theories predict that all financing decisions move firms towards target capital structures. On the other hand, transitory debt hypothesis predicts that firms deliberately but temporarily deviate from target capital structures to fund a particular corporate action and...

This study provides further evidence of earnings management around security offerings. We find positive and significant discretionary current accruals coincident with offerings of reverse LBOs. Issuers in the most quot;aggressivequot; quartile of earnings management have a one-year aftermarket...

Our results show that the post-offering performance of private equity issuers is related to growth opportunities. We find significant long-run underperformance in stock returns following private placements only for firms with high Tobin's q. High-q firms experience not only poor stock price...