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| Author: | Bommel, J. van Vermaelen, T. |
| Title: | Post-IPO capital expenditures and market feedback |
| Journal: | Journal of Banking and Finance
2003 : FEB, VOL 27:2, p. 275-305 |
| Index terms: | Stock markets Equity capital Investment Decision making Models |
| Language: | eng |
| Abstract: | This paper presents an empirical test of the 'market feedback hypothesis', a theory suggesting that information aggregated in the IPO process is used for the firm's investment decision. The paper examines the relation btw. post-IPO unexpected capital expenditures and feedback generated during the IPO process for 1543 IPOs btw. 1987 and 1995. Feedback is measured by i. the unexpected price adjustment made at the end of the waiting period and ii. the unexpected initial return. Consistent with the hypothesis, it is found that positive feedback is followed by positive abnormal capital expenditures. |
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