Market reactions to capital increases: Insights from asset revaluation in pharmaceutical companies on the stock exchange
1 A. Gary Anderson Graduate school of Management, University of California, Riverside, USA.
2 Department of Marketing, College of Business Administration, University of Central Florida, USA.
3 Dreeben School of Education, University of the Incarnate Word, San Antonio, Texas, USA.
4 Department of Accounting, Science and Research Branch, Islamic Azad University, Iran.
5 Department of Accounting, Finance and Marketing, Pompea College of Business, University of New Haven, USA.
Research Article
World Journal of Advanced Research and Reviews, 2024, 23(02), 2486–2497
Publication history:
Received on 07 July 2024; revised on 19 August 2024; accepted on 21 August 2024
Abstract:
This study investigates the impact of capital increases on market reactions, focusing specifically on pharmaceutical companies listed on the Tehran Stock Exchange (TSE). We analyze stock returns over a six-month window: three months preceding and three months following the announcement of capital increases. Employing the market model, we assess investor responses and the revaluation of assets associated with these capital injections. Our comprehensive sample includes 200 pharmaceutical firms selected through systematic random sampling, covering the period from 2017 to 2023. The results reveal that asset revaluation significantly enhances investor reactions compared to capital increases stemming from cash contributions and retained earnings. Furthermore, our findings underscore the critical role of information transparency from company management in shaping market responses. This research contributes to a deeper understanding of investor behavior and informs management strategies related to capital restructuring in the dynamic pharmaceutical sector.
Keywords:
Market Reaction; Capital Increase; Pharmaceutical Companies; Asset Revaluation; Retained Earnings.
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Copyright © 2024 Author(s) retain the copyright of this article. This article is published under the terms of the Creative Commons Attribution Liscense 4.0