CORPORATE-GROWTH AND THE EQUITY-DEBT CHOICE

In this paper we extend the analysis of earlier investigations into th e relationship between patterns of corporate growth and the announceme nt of new financing (see fbr example, Pilotte 1992; Burton et al., 199 3) by examining the growth in turnover and earnings achieved by equity and debt-issuing firms. We study the performance of UK firms which ma de new financing announcements between 1989 and 1991 and find (i) that corporate growth generally declined in the years which followed the a nnouncement date and (ii) that equity-issuing firms exhibited higher p re-announcement growth in sales turnover and in earnings than their de bt-issuing counterparts - significantly higher growth in the case of t he expansion in the value of sales.