||In this paper, I provide evidences on whether Young ethnic groups under the age of 25 will react when the company announces the news of issuing common stock for cash at the same time, whether different purposes of the announcement influence investors’ investment decisions? We collected questionnaires which contains a total of 213 effective samples. The subjects of the study were mainly college and university students under age 25. We used one-way ANOVA to analyze our sample. Results indicate that investors will not change their shareholdings when the target company announced the news of issuing common stock for cash. When, I divide the purpose of issuing of common stock for cash into “investment purpose” and “debt repayment purpose”. The results show that when the target company issues common stock for cash for investment purpose, investors will not change their shareholdings. However, when the target company issues common stock for cash for debt repayment purpose, investors will decrease their shareholdings. For those companies who wants to improve their financial structure through issuance of common stock, investors may give a negative response to this message.|
Keywords: Effect of equity offering, Purpose of equity offering, Investment decisions.
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