Private Placement of Common Equity and Earnings Expectations

Private Placement of Common Equity and Earnings Expectations We examine earnings forecast revisions by analysts subsequent to the announcement of private equity placements. 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. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The Financial Review Wiley

Private Placement of Common Equity and Earnings Expectations

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Publisher
Wiley
Copyright
Copyright © 1999 Wiley Subscription Services, Inc., A Wiley Company
ISSN
0732-8516
eISSN
1540-6288
DOI
10.1111/j.1540-6288.1999.tb00460.x
Publisher site
See Article on Publisher Site

Abstract

We examine earnings forecast revisions by analysts subsequent to the announcement of private equity placements. 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.

Journal

The Financial ReviewWiley

Published: Aug 1, 1999

Keywords: ; ; ; ;

References

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