Size effects of seasoned stock issues: empirical evidence

Article Abstract:

Research indicates that when a publicly traded company announces a new common stock issue, the exchange price of the related company securities begin to fall. To determine whether the price decline is associated with the size of the common stock issuance relative to the number of existing shares, the abnormal returns on investment experienced by shareholders of 352 firms listed on the New York and American Stock Exchanges for the period from 1963 to 1978 were analyzed for price fluctuations prior to, on the day of, and immediately following the announcements of common stock issues in the Wall Street Journal. The most substantial price drops occur for industrial issues, and the smallest price fluctuations are experienced in the public utilities industry. For utilities, there is a size effect on prices during the issue announcement period, but there are no significant effects over any other time period.

Research, Forecasts and trends, Stock-exchange, Stock exchanges, Securities, Corporations, Valuation, Tender offers (Securities), Tender offers

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Stock prices and the dissemination of analysts' recommendations

Article Abstract:

The Wall Street Journal's column "Heard on the Street," as a source of analyst's recommendations on stocks, is not necessarily a secondary dissemination. Prior to publication of recommendations on a single firm, stock prices adjust. The unusual average performance of stock prices on the day of publication of the column and the two previous trading days is associated with recommendations written in the column. The observed market response is sustained even after firms with confounding releases have been eliminated. The reports of analysts from these firms are issued immediately before publication. The "Heard on the Street" column operates through a process wherein information is gathered, a consensus is formed, and investors are provided with the information.

Analysis, The Wall Street Journal (Newspaper), Newspaper columns

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Stock price response to accounting information in oligopoly

Article Abstract:

The relationship between the Ball-Brown effect and the information transfer effect in an oligopolic economicenvironment is examined using stock price responses. Information derived from the 'Digest of Earnings Report' of the Wall Street Journal were analyzed for stock market reactions towards companies' disclosure of accounting information.Both the disclosing firm and its competitor react favorably to sudden sales increases. Cost increases are regarded as unfavorable news by the disclosing firm, but considered favorable by competitors. Stock market responses are expected to be positive when there is an increase in earnings resulting from a similarly positive stock market reaction to a sales increase or a reduction in cost.

Financial statements, Oligopolies

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