Title

Private Placement of Common Equity and Earnings Expectations

Publication Type

Journal Article

Publication Date

8-1999

Abstract

Earnings forecast revisions by analysts subsequent to the announcement of private equity placements are examined. Results show that analysts make significant upward revisions to their forecasts for current-year earnings. Furthermore, these forecast revisions are significantly related to announcement-period abnormal returns, but not to the risk changes accompanying the equity placement. These findings are consistent with the information hypothesis, which suggests that private equity placements convey favorable information about future earnings.

Keywords

equity offerings, private placements, earnings forecast, information signalling

Discipline

Business | Corporate Finance | Portfolio and Security Analysis

Research Areas

Finance

Publication

Financial Review

Volume

34

Issue

3

First Page

19

Last Page

32

ISSN

0732-8516

Identifier

10.1111/j.1540-6288.1999.tb00460.x

Publisher

Wiley

Additional URL

http://dx.doi.org/10.1111/j.1540-6288.1999.tb00460.x