Valuation effects of insurers' security offerings

    Authors

    A. Akhigbe; S. F. Borde;J. Madura

    Comments

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    Abbreviated Journal Title

    J. Risk Insur.

    Keywords

    BANK-HOLDING COMPANIES; CAPITAL STRUCTURE; EQUITY ISSUES; AGENCY COSTS; INFORMATION; HYPOTHESIS; DIVIDEND; Business, Finance; Economics

    Abstract

    Valuation effects of insurers' security offerings are examined by measuring the share price response to announcements of impending security issues. Insurers exhibit unique characteristics that can cause the signal emitted by their security offerings to differ from that of other firms. An event methodology is used. Results of this analysis confirm that insurance company share prices react uniquely when compared to security offerings in other industries. For the entire sample, the market reaction in response to equity offerings or to debt offerings is more favorable than what has been found for industrial firms. Cross-sectional analyses suggest that abnormal returns associated with equity offerings are negatively related to the relative size of the offering and change in leverage and are positively related to growth in sales. Abnormal returns associated with debt offerings are positively related to the relative size of the offering and negatively related to growth in sales.

    Journal Title

    Journal of Risk and Insurance

    Volume

    64

    Issue/Number

    1

    Publication Date

    1-1-1997

    Document Type

    Article

    Language

    English

    First Page

    115

    Last Page

    137

    WOS Identifier

    WOS:A1997WC36600002

    ISSN

    0022-4367

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