Are financial markets overly optimistic about the prospects of firms that issue equity? Evidence from voluntary versus involuntary equity issuances by banks

Article Abstract:

This paper examines firm performance around announcements of common stock issues. We study the banking industry in which some stock issues are made voluntarily by managers, and other issues are involuntary. We find that banks that voluntarily issue common stock experience a significant drop in the matched adjusted operating performance following the issue, a significant drop in benchmark firms' adjusted stock prices following the issue, and systematically negative market reactions to post-issue quarterly earnings announcements. Banks that issue common stock involuntarily experience values for these measures that are not significantly different from those of the benchmark firm(s). (Reprinted by permission of the publisher.)

Commercial Banks, Commercial Banking, Research, Securities, Financial markets, Bank stocks

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An examination of the impact of the Garn-St. Germain Depository Institutions Act of 1982 on commercial banks and savings and loans

Article Abstract:

This paper evaluates the effects of events leading to the passage of the Garn-St. Germain Depository Institutions Act of 1982. The evidence suggests that the call for reform by President Reagan's Housing Commission and the Senate passage of the bill produced positive abnormal returns to stockholders of large savings and loans and commercial banks. Stockholders of small S&Ls and banks, on the other hand, generally experienced negative abnormal returns. Furthermore, when hopes of passage of the Act faded, significant negative (positive) abnormal returns were experienced by stockholders of large (small) S&Ls and banks. (Reprinted by permission of the publisher.)

DEPOSITORY INSTITUTIONS, Savings Institutions, Savings and loan associations

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An investigation of capital market reactions to pronouncements on fair value accounting

Article Abstract:

A correlation was made on the effects of the announcements on the adoption of fair value accounting in banks and the reaction of the bank's stock prices on the capital markets. Announcements of the adoption of fair value accounting produced a dip in the bank's stock prices and most affected was the book value of the bank's investment portfolios.

Accounting Methods, Accounting and auditing, Accounting, Portfolio management, Investments

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