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6. (5 points) Below is the market reaction in term of the change of stock...

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Accounting

6. (5 points) Below is the market reaction in term of the change of stock price to different activities adopted by firms. For example, the stock price decreases on average 3% when a firm announces a seasoned equity offering; the stock price increases on average 5% when a firm announces stock repurchase. Issuing seasoned equity -3% reaction on average Issuing public bonds 0% reaction on average Issuing bank loans +2% reaction on average Announcing stock repurchase +5% reaction on average Can you provide rational explanation on these phenomena using corporate finance theories?

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