Controlling shareholders and market timing in share issuance

F. Urzua Infante, B. Larrain

Research output: Contribution to journalArticleScientificpeer-review

19 Citations (Scopus)


We examine market timing in the equity issuance of firms controlled by large shareholders using a hand-collected data set of controlling shareholders' ownership stakes in Chile between 1990 and 2009. When a firm issues shares, the controlling shareholder can either maintain or change his ownership stake depending on how many of the new shares he subscribes. Issuance predicts poor future returns and is preceded by high returns, but only when the controlling shareholder's stake is significantly reduced. Consistent with market timing, the results are stronger in the absence of institutional investors and in hot issuance markets.
Original languageEnglish
Pages (from-to)661-681
JournalJournal of Financial Economics
Issue number3
Publication statusPublished - 2013


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