TY  - JOUR
AU  - Kang,Jun-Koo
AU  - Kim,Yong-Cheol
AU  - Stulz,Rene M.
TI  - The Underreaction Hypothesis and the New Issue Puzzle: Evidence from Japan
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 5819
PY  - 1996
Y2  - November 1996
UR  - http://www.nber.org/papers/w5819
L1  - http://www.nber.org/papers/w5819.pdf
N1  - Author contact info:
Jun-Koo Kang
Nanyang Technological University
Singapore
E-Mail: JKKANG@ntu.edu.sg

Yong-Cheol Kim
Sheldon B. Lubar School of Business
University of Wisconsin-Milwaukee 
PO Box 742 
Milwaukee, Wisconsin 53201-0742
E-Mail: ykim@uwm.edu

René M. Stulz
The Ohio State University
Fisher College of Business
806A Fisher Hall
Columbus, OH 43210-1144
Tel: 614/292-1970
Fax: 614/292-2359
E-Mail: stulz_1@cob.osu.edu
AB  - This paper investigates the long-term performance of Japanese firms issuing convertible debt or equity.  We find that these firms perform poorly even though the stock-price reaction to convertible debt and equity issue announcements is not significantly negative for Japanese firms and Japanese firms do not issue equity or convertible debt following strong positive abnormal returns.  Whereas in the U.S. underperformance appears to be concentrated in the smaller firms and in the firms with a high market-to-book ratio, this is not the case in Japan.  The underperformance of Japanese issuing firms cannot be understood in terms of the underreaction hypothesis that some have advanced as an explanation for the poor returns of U.S. issuing firms.
ER  -