Common Stock Offerings and Earnings Expectations: A Test of the Release of Unfavorable Information

  • Author(s): PETER ALAN BROUS
  • Published: Apr 30, 2012
  • Pages: 1517-1536
  • DOI: 10.1111/j.1540-6261.1992.tb04668.x

ABSTRACT

This paper examines the revisions of analysts' forecasts of future earnings around announcements of common stock offerings. The forecasts of the current year earnings are, on average, decreased when firms announce plans to issue additional common stock. The size of the decrease is significantly related to announcement period abnormal stock returns. In contrast, forecasts of the five‐year growth rate of earnings are, on average, unchanged. We interpret these results as being consistent with the claim that equity offering announcements convey unfavorable information regarding the firm's short‐term but not its long‐term earnings prospects.

Jump to menu

Main Navigation

Search the Site / Journal

Search Keywords

Search Tips

Members' Login

Credentials

Members' Options

Site Footer

View Mobile Version