The effect of capital raising goal announcement on stock price changes around the E.G.M dates

This study aims to investigate the effect of capital raising on equity price changes around the extraordinary general meetings (E.G.M) dates. In this study, the price effects of four capital raising methods including stock right, stock dividend, a combination of these two, and assets reevaluation surplus, separating three corporate goals from the capital raising including corporate development plan, financial structure reform, and participation in raising capital by capable firms were examined.This study was conducted on 287 firms in Tehran Stock Exchange. Statistical society during the four years from 2015 to 2019 years. The research methodology is event analysis which is measured by the descriptive statistic of theoretical price and adjusted returns by the TEPIX index.The result of this study shows that the difference between the theoretical price average and mean close price after the E.G.M dates for stock dividend, stock right, and assets revaluation surplus is positive. The highest average theoretical return belongs to the participation goal in capital-raising capable firms for a combination of stock right and stock dividend, financial structure reform for reevaluation, and development of the firm in stock dividend. In the case of a stock dividend and assets reevaluation, the difference between the theoretical average price and average close price after E.G.M and also the average theoretical return is increasing when the capital raising percentage goes up. In addition, the daily return adjusted by TEPIX on the four ways of capital raising and separating corporate goals is not zero around the E.G.M dates