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Employee Stock Ownership Plans, Common Stock Wealth Effects and Stock Price Variability

Majed R. Muhtaseb (Professor of Finance, Finance, Real Estate and Law Department, California State Polytechnic University, Pomona, CA 91768–4083 and Zade Investment Management Services, Chino Hills, CA 91709)

Managerial Finance

ISSN: 0307-4358

Article publication date: 1 March 1997

193

Abstract

The objective of this paper is to document the impact of several types of ESOP announcements on shareholder wealth. The market welcomes the news of initiation ESOPs, nonleveraged ESOPs and ESOPs implemented by firms with B‐BAA Moody's bond rating. However, the market indifferently responds to announcements of expansion ESOPs, leveraged ESOPs and ESOPs adopted by firms with A‐AAA Moody's bond rating. Announcements of nonleveraged ESOPs, expansion ESOPs and B‐BAA rating ESOPs are found to be associated with some resolution of asymmetric information.

Citation

Muhtaseb, M.R. (1997), "Employee Stock Ownership Plans, Common Stock Wealth Effects and Stock Price Variability", Managerial Finance, Vol. 23 No. 3, pp. 39-48. https://doi.org/10.1108/eb018613

Publisher

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MCB UP Ltd

Copyright © 1997, MCB UP Limited

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