The Signaling Effect of Durations between Equity and Debt Issues

Bilinski, P. & Mohamed, A. (2015). The Signaling Effect of Durations between Equity and Debt Issues. Financial Markets, Institutions, & Instruments, 24(2-3), pp. 159-190. doi: 10.1111/fmii.12027

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Abstract

This study examines whether durations between equity and debt offerings allow investors to identify firms that are more likely to time issues of overvalued securities. We show that firms with higher stock overpricing are more likely to quickly issue both seasoned equity and debt following the previous capital acquisition. Investors understand issuers’ incentives to quickly return to the capital market and react less favorably to equity and debt issues that follow shortly after the previous offering. Together, the results show that durations between equity and debt issues provide valuable signals to investors on whether the issuer is likely to be timing the market.

Item Type: Article
Additional Information: This is the peer reviewed version of the following article: Bilinski, P. and Mohamed, A. (2015), The Signaling Effect of Durations between Equity and Debt Issues. Financial Markets, Institutions & Instruments, 24: 159–190, which has been published in final form at http://dx.doi.org/10.1111/fmii.12027. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving.
Uncontrolled Keywords: seasoned equity and debt offerings, market timing, duration analysis, announcement effect.
Subjects: H Social Sciences > HG Finance
Divisions: Cass Business School > Faculty of Finance
URI: http://openaccess.city.ac.uk/id/eprint/7634

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