The impact of capital offering on real estate developers and construction sector stock return in Hong Kong

Chi Man Hui, Kwan Wah Wong, Yat Hung Chiang

Research output: Journal article publicationJournal articleAcademic researchpeer-review

3 Citations (Scopus)


Purpose - Numerous studies suggest that announcements of capital offerings cause abnormal price reaction in stock markets. However, despite extensive research, relevant studies on the property sector are still relatively scarce, especially in the case of Hong Kong. The determinants of the post-offering price effects, which vary across industries and regions, are yet to be identified. This paper aims to examine the abnormal stock return phenomenon of Hong Kong property developers and construction companies surrounding the announcement and offer dates of capital issuances. Design/methodology/approach - It employs the event-study methodology and regression analysis to verify such effects. Findings - The major findings are: on equity offering announcements, there is a significant negative price reaction; the pre-offering debt/equity ratio of a firm is significantly associated with the level of abnormal price reactions; and on debt offerings there is, to the contrary, a modest increase in stock prices. Practical implications - This study has identified a set of determinants of the post-offering stock price effects. Originality/value - It can be concluded that there is evidence of abnormal price effects over the announcement and offer dates of capital issuances with unique characteristics of the property and construction sectors in Hong Kong.
Original languageEnglish
Pages (from-to)204-216
Number of pages13
JournalProperty Management
Issue number3
Publication statusPublished - 18 Aug 2005


  • Construction industry
  • Discounts
  • Hong Kong
  • Real estate
  • Stock markets

ASJC Scopus subject areas

  • Tourism, Leisure and Hospitality Management

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