This paper presents results of a pilot research in HCMC stock market in 2010: issues of seasoned equity on the HoSE make the stock prices fall drastically two-four days before the ex-rights (XR) day, especially the issue of subscription rights. | ECONOMIC DEVELOPMENT No. 206, October 2011 A TEST OF SEMI-STRONG FORM MARKET EFFICIENCY: AEFFECTS TEST OFOF SEMI-STRONG FORM MARKET EFFICIENCY: SEASONED EQUITY OFFERING ON STOCK IN HoSE IN 2010 EQUITY EFFECTSPRICES OF SEASONED OFFERING ON STOCK PRICES by HOÀ VIEÁT TIEÁN & ÑINH THÒ THU HAØ* IN HoSE IN 2010 by DR. HOÀ VIEÁT TIEÁN & ÑINH THÒ THU HAØ* Studying effects of seasoned equity offering on stock prices is one of the trends in testing the semi-strong form of the efficient market hypothesis. Researches worldwide have produced remarkable results but no research on this aspect in Vietnam is found. This paper presents results of a pilot research in HCMC stock market in 2010: issues of seasoned equity on the HoSE make the stock prices fall drastically two-four days before the ex-rights (XR) day, especially the issue of subscription rights. The prices also fall remarkably within two or three days after the XR day, especially in case of issue of shares as payments for dividends or bonuses. Moreover, the stock prices rose strongly on the XR day for most fields, except for realty and agricultural businesses. After the issues, number of stocks enjoying lower degrees of risk is equal to the number of stocks facing higher degrees of risk. Keywords: seasoned equity offering, risk of price fluctuation, abnormal return, efficient market hypothesis Issuing seasoned equity is one of the ways to mobilize more capital and modify structure of capital and of shareholders. In spite of its minor role, the seasoned equity issues account for 5% of the volume of capital to mobilize by listed companies in developed markets. This subject has been explored widely from various aspects in both developed and emerging markets as one of methods of testing the semi-strong form of efficient market hypothesis. However, there is no study of this aspect of the Vietnamese stock market in recent years in particular. This paper examines effects of seasoned equity issues on prices of stocks listed .
