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

descriptionPublicationkeyboard_double_arrow_right Article 01 Mar 1997 English Publisher:EmeraldJournal:Managerial Finance, volume 23, pages 39-48 (issn: 0307-4358,

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Authors: Majed R. Muhtaseb;

doi: 10.1108/eb018613

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

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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.

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California State Polytechnic University
United States

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