scholarly journals Stock price reactions to capital structure changes in Chilean firms: Examining the effects of ownership structure, growth opportunities and leverage

2020 ◽  
Vol 23 (49) ◽  
pp. 71-94
Author(s):  
Jorge A. Muñoz Mendoza ◽  
Sandra M. Sepúlveda Yelpo ◽  
Carmen L. Veloso Ramos
Keyword(s):  
Capital Structure ◽  
Ownership Structure ◽  
Stock Price ◽  
Growth Opportunities ◽  
Controlling Shareholder ◽  
Linear Effect ◽  
Structure Changes ◽  
Negative Effect ◽  
Price Reactions ◽  
Stock Price Reactions

We analyzed the effects of ownership structure, capital structure and growth opportunities on stock price reactions when companies issued debt or equity. Our results, based on event study methodology and IV regressions from a sample of 70 Chilean firms, indicate that controlling shareholder ownership has a negative effect on stock price reactions for debt issuances and a positive effect for equity issuance. These results indicate that debt issuances are a substitute for majority shareholder monitoring, and that equity issuances are associated with superior corporate performance. Equity issuances are a means for expropriating wealth from non-controlling shareholders. Debt and growth opportunities have a non-linear effect.

Risk to Firm Value for Taiwanese Companies Investing in China: Who Fares Better?

2010 ◽  
Vol 13 (02) ◽  
pp. 237-266
Author(s):  
Hsu-Huei Huang ◽  
Min-Lee Chan ◽  
Yu-Sheng Chang
Keyword(s):  
Firm Value ◽  
Stock Price ◽  
Free Cash Flow ◽  
Outside Directors ◽  
Announcement Effect ◽  
Negative Effect ◽  
History Of ◽  
Price Reactions ◽  
Stock Price Reactions ◽  
Investment In China

The main purpose of this paper is to study the effect on the stock price that a Taiwanese company may experience when announcing it is engaging in foreign direct investment in China. This study has been able to observe the influence of political risk on the FDI announcement effect during one of the tensest periods in the history of the cross-Strait relationship. We have found an overall significantly negative effect for all companies in Taiwan that announced they were investing directly in China during this risky period. We have further found that companies with higher free cash flow and greater information asymmetry experience worse stock price reactions to such announcements, and that those with low growth opportunities, higher institutional shareholdings, outside directors on the board, or a higher ratio of outside directors experience better stock price reactions to the announcements. Finally, we have found that the FDI announcement effect is better for firms whose board chairman also serves as the CEO or for firms that are family controlled.

Going Private Buyouts and Determinants of Shareholders' Returns

1993 ◽  
Vol 8 (1) ◽  
pp. 1-25 ◽  
Author(s):  
Nickolaos G. Travlos ◽  
Marcia Millon Cornett
Keyword(s):  
Capital Structure ◽  
Ownership Structure ◽  
Stock Price ◽  
Agency Costs ◽  
Abnormal Returns ◽  
Going Private ◽  
Price Reaction ◽  
Structure Changes ◽  
Stock Price Reaction ◽  
Alternative Sources

This paper examines the effect on stock and nonconvertible bond prices of going private buyout proposals and explores sources of stock price reaction. Three alternative sources of abnormal returns are analyzed: the elimination of stockholders' servicing cost, the capital structure changes resulting from borrowings to take the firm private, and the elimination of agency costs associated with the prebuyout ownership structure. The findings indicate that going private buyouts generate large benefits to the firms' owners by eliminating the agency costs prevailing in the firms prior to going private.

Stock price reactions to brand value announcements: Magnitude and moderators

2015 ◽  
Vol 32 (1) ◽  
pp. 34-47 ◽  
Author(s):  
Marie Dutordoir ◽  
Frank H.M. Verbeeten ◽  
Dominique De Beijer
Keyword(s):  
Stock Price ◽  
Brand Value ◽  
Price Reactions ◽  
Stock Price Reactions
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