The information content of multiple seasoned common stock offerings by bank holding companies

Myron B. Slovin, Marie Sushka, John A. Polonchek

Research output: Contribution to journalArticle

16 Scopus citations

Abstract

We examine whether the market reaction to announcements by banking firms of repeat seasoned stock issues differs from that of first-stage issues. We find that the valuation effect of repeat issues is significantly negative. In contrast, earlier first-stage issues by these banking firms generate normal returns. This evidence supports the Gale and Stiglitz (1989) hypothesis that repeat common stock issues reveal negative private information that cannot be discerned in first-stage issues. The evidence also indicates that the impact of repeat issues is conditioned on the banking firm's capital position.

Original languageEnglish (US)
Pages (from-to)633-646
Number of pages14
JournalJournal of Banking and Finance
Volume15
Issue number3
DOIs
StatePublished - Jun 1991

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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