How Different is Japanese Corporate Finance? An Investigation of the Information Content of New Security Issues

41 Pages Posted: 13 Aug 2000 Last revised: 1 Dec 2022

See all articles by Jun-Koo Kang

Jun-Koo Kang

Nanyang Business School, Nanyang Technological University

René M. Stulz

Ohio State University (OSU) - Department of Finance; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI)

Multiple version iconThere are 3 versions of this paper

Date Written: October 1994

Abstract

This paper studies the shareholder wealth effects associated with 875 new security issues in Japan from January 1, 1985 to May 31, 1991. The sample includes public equity, private equity, rights offerings, straight debt, warrant debt and convertible debt issues. Contrary to the U.S., the announcement of convertible debt issues is accompanied by a significant positive abnormal return of 1.05%. The announcement of equity issues has a positive abnormal return of 0.45%, significant at the 0.10 level, but this positive abnormal return can be attributed to one year in our sample and is offset by a negative issue date abnormal return of -1.01%. The abnormal returns are negatively related to firm size, so that for equity issues (but not for convertible debt issues), large Japanese firms have significant negative announcement abnormal returns. Our evidence is consistent with the view that Japanese managers decide to issue shares based on different considerations than American managers.

Suggested Citation

Kang, Jun-Koo and Stulz, Rene M., How Different is Japanese Corporate Finance? An Investigation of the Information Content of New Security Issues (October 1994). NBER Working Paper No. w4908, Available at SSRN: https://ssrn.com/abstract=238458

Jun-Koo Kang (Contact Author)

Nanyang Business School, Nanyang Technological University ( email )

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Rene M. Stulz

Ohio State University (OSU) - Department of Finance ( email )

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HOME PAGE: http://www.cob.ohio-state.edu/fin/faculty/stulz

National Bureau of Economic Research (NBER)

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European Corporate Governance Institute (ECGI)

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