Abstract
This paper demonstrates that the market reaction to announcements of seasoned stock offerings varies with the presence of outside agents - accounting firms, commercial banks, and underwriters - who monitor the firm. The stock price reaction is a positive function of the quantity of bank debt in a firm's financial structure, the quality of the firm's investment banker, and the quality of the public accounting firm that serves as its external auditor. The evidence supports theoretical models that imply external agents audit, monitor, and certify decisions to issue seasoned common stock.
| Original language | English (US) |
|---|---|
| Pages (from-to) | 397-417 |
| Number of pages | 21 |
| Journal | Journal of Accounting and Economics |
| Volume | 12 |
| Issue number | 4 |
| DOIs | |
| State | Published - Mar 1990 |
ASJC Scopus subject areas
- Accounting
- Finance
- Economics and Econometrics
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