This paper provides event study evidence on securities issuance by commercial banks, a set of firms in which capital structure is regulated. The evidence supports the information hypothesis of securities issuance but also indicates that capital regulation interferes with information transfer. We find that: one, the negative impact of equity issues on bank stock prices is much weaker than for non-financial firms; two, the impact of securities issuance is uniformly less negative after the imposition of stricter capital requirements in 1981; and three, the impact of securities issuance is further attenuated after 1981 for non-multinational banks, which faced more specific capital requirements than multinational banks.
ASJC Scopus subject areas
- Economics and Econometrics