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Information Asymmetry and Equity Issues

Published online by Cambridge University Press:  06 April 2009

Nathalie Dierkens
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Abstract

The paper examines the relevance of information asymmetry between the managers of the firm and the market for the equity issue process. It uses four proxies for information asymmetry and presents three groups of tests: cross-sectional regressions of the reaction at equity issue announcements, comparisons of information asymmetry before and after the announcements, and analyses of the timing behavior observed during the equity issue process. The results show that information asymmetry is a significant variable for equity issues.

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , Volume 26 , Issue 2 , June 1991 , pp. 181 - 199
Copyright
Copyright © School of Business Administration, University of Washington 1991

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