The effect of capital increase announcements on stock returns of companies listed on Borsa İstanbul

One of the methods frequently used by companies to meet their financing needs is capital increase. However, when increasing capital, how this decision is perceived by investors in the market and how stock prices and returns are shaped accordingly are very important for companies and their stakeholders. Therefore, the research attempts to analyze whether the stock market in Turkey is efficient enough to provide investors with a return above the market with all publicly available information on capital increase announcements.. The main purpose of the study is to test the semi-strong efficiency form in paid and free capital increase announcements in Borsa Istanbul. In the research, 1436 capital increase announcements of 337 different companies that announced paid or free capital increases in the BIST-100 index between 1996 and 2021 were examined. The event study method was used as the analysis method and event windows were created in three different frames in the short term. According to the findings of the study, in the short term analysis of the companies that announced capital increases in BIST-100, while the average and cumulative abnormal returns before the capital increase announcement were positive, the abnormal returns after the capital increase were calculated as negative values, and the capital increase announcements of the companies affected the shares of the relevant companies in the short term. It has been determined that it has an impact on stock returns. It was found that the average and cumulative abnormal stock returns before and after the announcement differed according to sectors. According to these findings, it can be said that the BIST-100 index was affected by the capital increase announcements made to the public in the examined period and the Borsa Istanbul Market (BIST) was not efficient in the semi-strong form. The result obtained in the study supports the signaling hypothesis regarding the announcement effect and the information content hypothesis stating that the stock price changes significantly during the announcement of the capital increase.