• Journal of Digital Convergence
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• v.12 no.3
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• pp.149-160
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• 2014

This paper analyses whether change in corporate dividend policy affects the new issue announcement effects. By conducting an event study using 683 new equity announcements data from year 2000 to year 2009, we find firms paying more dividends experience relatively negative announcement effects of seasoned equity offerings comparing with firms paying less dividend. The cross sectional regression analysis results confirm our findings. These results indicate that corporate dividend policy change may interact with forthcoming new equity announcement decision, which may result in a negative signal to the capital markets.

• Asia-Pacific Journal of Business Venturing and Entrepreneurship
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• v.4 no.4
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• pp.45-70
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• 2009

This article investigates which types of the strategies announced by the listed firms contribute to enhancing the long-term performance of the companies. Since 2002, Korean Exchange adopted the "faire disclosure policy" which mandates that all publicly traded companies must disclose material information to all investors at the same time. Thanks to the policy, Korean investors can, now, easily access the board's decision on management strategies on the same day the decision is made. If the companies trustfully carry out their announced strategies, we can decide which types of strategies actually enhance or deteriorate the long-term performance, simply by comparing the announced strategies and the firm's performance. The sample companies are confined to 60 firms that became listed in the KOSDAQ market through back-door listing from 2003 to 2005. Using only the newly listed companies, we can avoid the interference on the long-term performance of the strategies pursued before the event date. This often holds true, for many companies radically modify their strategies after the listing. Furthermore, the back-door listing companies serve our purpose better than IPO companies do, because the former tend to have a variety of announcement within a given period of time beginning the listing date. Using these sample companies, this article analyzes the effect on one year buy-and-hold returns and abnormal buy-and-hold returns after the listing of the various types of strategies announced during the same period of time. The results show that those evidences of restructuring such as 'reduction of capital' and 'resignation of incumbent board members', actually contribute to the increase in adjusted long-term stock returns. Those strategies which can be view as evidence of new investment such as 'increase in tangible assets', 'acquisition of other companies', do also helps the stockholders better off. On the contrary, 'increase in bank loans', 'changes of CEO' and 'merger' deteriorate the equity value. The last findings let us to presume that the back-door listing companies appear to use the bank loans for value-reducing activities; the change in CEO is not a sign of restructuring, but rather a sign of failure of the restructuring; another merger carried out after back-door listing itself is also value-reducing activity. This article's findings on reduction of capital, merger and bank loans oppose the results of the former empirical studies which analyze only the short-term effect on stock price. Therefore, more long-term performance studies on public disclosures are in order.