AN EMPIRICAL STUDY OF CHARTER AMENDMENTS TO AUTHORIZE COMMON STOCK
Abstract
Charter amendments to authorize common stock involve an increase in the number of shares available for issuance. Firms undertake the amendment when the remaining shares of authorized stock are expected to be insufficient for the upcoming activities of the firm. This study examines the impact of authorizations on stock prices and presents the capitalized value explanation to account for the behavior of stock prices around stock offering announcements. The proposition theorize that the responses at offerings are related to the responses at authorization. The study indicates that authorizations do not result in any significant revaluations of stock prices. Consequently, the capitalized value proposition was not supported. Stock returns surrounding the event, however, provide new ways to verify some of the conjectures raised to explain the pattern of returns around offering announcements.
Degree
Ph.D.
Subject Area
Finance
Off-Campus Purdue Users:
To access this dissertation, please log in to our
proxy server.