Abstract:Previous evidence has documented that equity issuers underperform in the long-run. One possible explanation is that investors have overoptimistic expectations regarding future earnings and the underperformance occurs as these expectations are corrected over time. Our central focus is to test this hypothesis for Spanish rights issuing firms, for that, firstly we examine analysts' predictions about future earnings of these companies. We observe that forecasts are unusually favourable and, moreover, the post-offe… Show more
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