| Popis: |
This dissertation examines various corporate equity transactions. Unlike Dutch auction repurchases and tender offers, open-market repurchase programs do not precommit firms to acquire a specified number of shares. In chapter one, we find that during the three years following the announcement firms on average acquire 74 to 82 percent of the shares they originally targeted. Further, we report evidence of managers exploiting the inherent flexibility of open-market repurchase programs; actual repurchases are negatively related with prior stock returns and positively related to the firm's cash flows. Chapter two continues the examination open-market repurchase programs. Heterogeneity among the impounded capital gains and effective capital gains tax rates of investors result in an upward sloping supply curve for firms attempting to repurchase their shares in the open-market. Cross-sectional differences in the excess returns observed around the announcement of open-market repurchase programs are positively related to investors' cost basis and negatively related to their impounded capital gains. Additionally, these relationships appear robust to differing tax regimes; however, the Tax Reform Act of 1986 did appear to decrease the tax shelter value of capital losses. Finally, chapter three examines seasoned equity offers, intuitively the other side of the coin from share repurchases. Specifically, seasoned equity offers by electric utilities are analyzed to exploit the regulated environment of the electric utility industry. Unlike the announcement of a seasoned equity offer by an industrial firm, a similar offering and announcement by a public utility is relatively predictable; no new information is provided by the announcement and should not effect stock price. Equity offers by electric utilities should not surprise investors and it is anomalous to observe any price effects, much less to differentially explain these effects by systematic differences in regulation. Empirical results for the time period 1972 through 1984 indicate that the excess returns observed around the announcement of a seasoned equity issue by an electric utility are largely a result of the inadequate or delayed response by regulators being impounded into the equity price. In effect, our results show that old shareholders are temporarily required to subsidize the return on the new equity. |
