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The impact of capital offering on real estate developers and construction sector stock return in Hong Kong

Eddie Chi Man Hui (Department of Building and Real Estate, The Hong Kong Polytechnic University, Kowloon, Hong Kong)
Francis Kwan Wah Wong (Department of Building and Real Estate, The Hong Kong Polytechnic University, Kowloon, Hong Kong)
Yat Hung Chiang (Department of Building and Real Estate, The Hong Kong Polytechnic University, Kowloon, Hong Kong)

Property Management

ISSN: 0263-7472

Article publication date: 1 July 2005

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Abstract

Purpose

Numerous studies suggest that announcements of capital offerings cause abnormal price reaction in stock markets. However, despite extensive research, relevant studies on the property sector are still relatively scarce, especially in the case of Hong Kong. The determinants of the post‐offering price effects, which vary across industries and regions, are yet to be identified. This paper aims to examine the abnormal stock return phenomenon of Hong Kong property developers and construction companies surrounding the announcement and offer dates of capital issuances.

Design/methodology/approach

It employs the event‐study methodology and regression analysis to verify such effects.

Findings

The major findings are: on equity offering announcements, there is a significant negative price reaction; the pre‐offering debt/equity ratio of a firm is significantly associated with the level of abnormal price reactions; and on debt offerings there is, to the contrary, a modest increase in stock prices.

Practical implications

This study has identified a set of determinants of the post‐offering stock price effects.

Originality/value

It can be concluded that there is evidence of abnormal price effects over the announcement and offer dates of capital issuances with unique characteristics of the property and construction sectors in Hong Kong.

Keywords

Citation

Chi Man Hui, E., Kwan Wah Wong, F. and Hung Chiang, Y. (2005), "The impact of capital offering on real estate developers and construction sector stock return in Hong Kong", Property Management, Vol. 23 No. 3, pp. 204-216. https://doi.org/10.1108/02637470510603547

Publisher

:

Emerald Group Publishing Limited

Copyright © 2005, Emerald Group Publishing Limited

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