Empirical evidence shows that new issues of equity by domestic firms in the U.S.market typically has a ________ stock price reaction and new equity issues in the U.S.markets by foreign firms with segmented domestic markets have a ________ stock price reaction.

Question

Quizplus · Accepted Answer

Empirical evidence suggests that new issues of equity by domestic firms in the U.S. market usually have negative stock price reactions, while new equity issues in the U.S. markets by foreign firms with segmented domestic markets have positive stock price reactions. Therefore, the correct choice is C - negative for domestic firms and positive for foreign firms with segmented markets.

Empirical Evidence Shows That New Issues of Equity by Domestic