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    An empirical investigation of capital expenditure announcements

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    Shenoy_2005.docx (38.93Kb)
    Issue Date
    2005
    Author
    Shenoy, Catherine
    Vafeas, Nikos
    Publisher
    Taylor and Francis
    Type
    Article
    Article Version
    Scholarly/refereed, author accepted manuscript
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    Abstract
    In this paper we study the market reaction to capital expenditure announcements in the backdrop of Jensen's [1986] free cash flow hypothesis. Our initial results confirm McConnell and Muscarella’s [1985] original findings suggesting that announcement-period returns follow in sign announced changes in capital spending. Moreover, estimating regressions similar to Lang Stulz and Walkling [1991] we find evidence that is somewhat weak, supportive of the free cash flow hypothesis in explaining announcement-period returns. Finally, an alternative information-signalling explanation for the market reaction cannot be ruled out entirely.
    URI
    http://hdl.handle.net/1808/16665
    DOI
    https://doi.org/10.1080/1350485052000345564
    Collections
    • Center for East Asian Studies Scholarly Works [351]
    • School of Business Scholarly Works [212]
    Citation
    Shenoy, Catherine, and N. Vafeas, 2005. The free cash flow effects of capital expenditure announcements. Applied Economics Letters 12, Nos. 14-15, p. 907-911. http://dx.doi.org/10.1080/1350485052000345564

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    Contact KU ScholarWorks
    785-864-8983
    KU Libraries
    1425 Jayhawk Blvd
    Lawrence, KS 66045
    785-864-8983

    KU Libraries
    1425 Jayhawk Blvd
    Lawrence, KS 66045
    Image Credits
     

     

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