The Issue Decision of Manager‐Owners under Information Asymmetry

Journal Article (Journal Article)

A firm must issue common stock in order to undertake a new investment, and the firm's manager‐owners can value the firm more accurately than the market. The ability of the manager‐owners to trade in the firm's shares during the issue (a) reduces the investments that are foregone because of the market's mispricing the firm's shares, (b) changes the size and direction of the stock price change when the firm announces a new stock issue, and (c) changes the market value of the firm before and after the issue announcement, whether or not it decides to issue. 1987 The American Finance Association

Full Text

Duke Authors

Cited Authors


Published Date

  • January 1, 1987

Published In

Volume / Issue

  • 42 / 5

Start / End Page

  • 1245 - 1260

Electronic International Standard Serial Number (EISSN)

  • 1540-6261

International Standard Serial Number (ISSN)

  • 0022-1082

Digital Object Identifier (DOI)

  • 10.1111/j.1540-6261.1987.tb04364.x

Citation Source

  • Scopus