Investigating the Market Reaction to the Capital Increase by the Assets Revaluation
Quarterly Journal of Securities Exchange

Quarterly Journal of Securities Exchange

Investigating the Market Reaction to the Capital Increase by the Assets Revaluation

Document Type : Original Article

Authors
Ahmad Khodamipour 1
nahid rezaei 2
Mohammadreza Rezaeizadeh Khanaman 3
1 Associate Professor, Shahid Bahonar University of Kerman, Iran
2 Accounting of Shahid Bahonar Kerman
3 M.Sc. Student, Department of Accounting, Faculty of Management and Economics, Shahid Bahonar University, Kerman, Iran
10.22034/jse.2021.11692.1783
Abstract
Given that sudden events and the influx of new information into the market such as announcements of capital increases lead to heightened return volatility and the emergence of abnormal returns, the present study investigates investors' reactions to capital increases via asset revaluation. The statistical sample comprises 147 companies listed on the Tehran Stock Exchange, selected through systematic random sampling for the period 1390–1397 (2011–2018). Cumulative abnormal returns (CAR) were calculated over a six-month window (three months before and after the capital increase announcement) using the market model and served as a measure of investor reaction to capital increases from asset revaluation. The findings indicate that capital increases through asset revaluation have a positive and significant effect on investor reactions. Moreover, the results reveal that the market reacts more strongly to capital increases from asset revaluation compared to those from cash contributions and retained earnings. These findings can assist company managers in financial decision-making and help investors evaluate investment opportunities.
Keywords
market reaction
abnormal return
assets revaluation
Capital Increase
Subjects
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Quarterly Journal of Securities Exchange
Volume 19, Issue 73
Spring 2026
Pages 115-148