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Signaling and the Valuation of Unseasoned New Issues
Abstract
This paper is an empirical examination of the relation between firm value and two potential actions by entrepreneurs attempting to signal to investors information about otherwise unobservable firm features. The signals investigated are the proportion of equity ownership retained by entrepreneurs and the dividend policy of the firm; both signals are hypothesized to be positively related to firm value. Using a sample of unseasoned new equity issues, the empirical results are consistent with the entrepreneurial ownership retention hypothesis, but the dividend signaling hypothesis is rejected.
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Citations
Cited by
Corporate financing and investment decisions when firms have information that investors do not have
Myers, S. C., & Majluf, N. S. (1984) · Journal of Financial Economics · doi:10.1016/0304-405x(84)90023-0 · Cited by 18,957
Dividend Policy under Asymmetric Information
MILLER, M. H., & ROCK, K. (1985) · The Journal of Finance · doi:10.1111/j.1540-6261.1985.tb02362.x · Cited by 3,441
Masulis, R. W., & Korwar, A. N. (1986) · Journal of Financial Economics · doi:10.1016/0304-405x(86)90051-6 · Cited by 894
Auditor Reputation and the Pricing of Initial Public Offerings.
Beatty, R. P. (1989) · The Accounting Review · doi:10.2308/tar-4478058 · Cited by 634
Evidence on the Impact of the Agency Costs of Debt on Corporate Debt Policy
Kim, W. S., & Sorensen, E. H. (1986) · The Journal of Financial and Quantitative Analysis · doi:10.2307/2330733 · Cited by 632
Metadata
- Authors
- DOWNES, D. H., & HEINKEL, R.
- Venue
- The Journal of Finance
- Publisher
- Wiley
- Published
- 1982-03
- Volume
- 37
- Issue
- 1
- Pages
- 1-10
- ISSN
- 0022-1082 (ISSN-L)
- 1540-6261
- OpenAlex
- W2103591541
- Cited by
- 399
- References
- 0
- FWCI
- 31.28
- Type
- journal article
- Language
- en
- Open access
- closed
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- DOWNES, D. H., & HEINKEL, R. (1982). Signaling and the Valuation of Unseasoned New Issues. The Journal of Finance. https://doi.org/10.1111/j.1540-6261.1982.tb01091.x
Data sources
Bibliographic data: Semantic Scholar, OpenAlex, Crossref.
Contains information from the Semantic Scholar Academic Graph Datasets, made available under the ODC Attribution License (ODC-BY 1.0).
Semantic Scholar’s data is described in: Kinney, R., et al. (2023). The Semantic Scholar Open Data Platform. arXiv:2301.10140.
