Professor Hendrik Bessembinder, W.P. Carey School of Business
We propose that expected returns estimated for the broad market based on observable firm characteristics provide a simple and useful benchmark for assessing whether returns to a given set of stocks are abnormal. As an important illustration, we document that the apparently abnormal long-run returns after corporate events, including initial and secondary public equity offerings, mergers and acquisitions, dividend initiations, share repurchases and stock splits, are substantially reduced or eliminated when event stock returns are compared to characteristic-based expected returns. A simple five-characteristic specification relying only on firm size, book-to-market ratio, profitability, asset growth, and return momentum performs as well as more complex specifications. This analysis supports the conclusion that returns after corporate events are largely explained by the characteristics of the firms engaging in the events.
Hendrik (Hank) Bessembinder rejoined the Department of Finance at the W.P. Carey School of Business as Professor of Finance and Francis J. and Mary B. Labriola Chair in 2015. He was previously an ASU faculty member from 1989 to 1999. Prior to rejoining ASU, he was A. Blaine Huntsman Chaired Presidential Professor of Finance at University of Utah and Professor of Finance at Emory University.
Dr Bessembinder is a regular contributor to the academic literature, having publishing multiple papers in elite journals including the Journal of Finance, Journal of Financial Economics, and Review of Financial Studies. His work addresses a variety of issues in financial markets, including market design and trading costs; trading strategies; stock markets; foreign exchange markets; derivative security markets; energy markets; risk pricing; risk management, and international financial management. He also serves as Managing Editor of Journal of Financial and Quantitative Analysis and Associate Editor of Journal of Financial Economics and of the Journal of Financial Markets.
Dr Bessembinder earned his PhD in finance from the University of Washington, a MBA from Washington State University, and a BS in business and economics from Utah State University.