The Equity Share in New Issues and Aggregate Stock Returns

@article{Baker1999TheES,
  title={The Equity Share in New Issues and Aggregate Stock Returns},
  author={M. Baker and Jeffrey Wurgler},
  journal={Corporate Finance: Capital Structure & Payout Policies eJournal},
  year={1999}
}
  • M. Baker, Jeffrey Wurgler
  • Published 1999
  • Economics, Business
  • Corporate Finance: Capital Structure & Payout Policies eJournal
  • The share of equity issues in total new equity and debt issues is a strong predictor of U.S. stock market returns between 1928 and 1997. In particular, firms issue relatively more equity than debt just before periods of low market returns. The equity share in new issues has stable predictive power in both halves of the sample period and after controlling for other known predictors. We do not find support for efficient market explanations of the results. Instead, the fact that the equity share… CONTINUE READING
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