On Long-Run Stock Returns after Corporate Events

Abstract

This paper revisits the controversial question of whether long-run abnormal returns are associated with major corporate events. Our analyses investigate initial public offerings (IPOs), seasoned equity offerings (SEOs), mergers and acquisitions (M&As), and dividend initiations. In an attempt to resolve ambiguous empirical evidence with respect to these events, we conduct a variety of tests for abnormal long-run performance, including buy-and-hold returns (BHARs), different calendar time approaches, and a recent standardized test. Empirical tests for these different methods consistently detect significant long-run abnormal returns for all four corporate events. We conclude that long-run abnormal returns exist with respect to these major corporate actions.