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IN A RECENT ISSUE of this Journal Professors Bonomo and Schotta presented evidence on the nature of open market operations.' Bonomo and Schotta use regression analysis to determine the fraction of changes in factors affecting free reserves and total reserves which have been offset by defensive open market operations.2 However, Bonomo and Schotta misspecify the importance of the regression constant, and as a result of this misspecification, the conclusions they reach are inappropriate. The estimating procedure employed in their study makes use of the following equations (6 and 7):3 AR=al + P AR* + (o and AFR = a2 + 32 AFR* + o2 where ARweek-to-week change in total reserves, AFR = week-to-week change in free reserves, AR* week-to-week change in factors affecting total reserves other than open market operations, AFR* week-to-week change in factors affecting free reserves other than open market operations, a,, a2 estimates, allegedly, of net of other factors influencing open market opera-A A tions, i.e., dynamic objectives; and Pt,2 2 =estimates of (1 + k1) and (1 + k2). Bonomo and Schotta assume that the equation constant may be treated as representing the dynamic element in open market operations. Their results indicate that the constants, al and &2, are not significantly different from zero at the 1 per cent level;4 therefore, the conclusion to be drawn from their tests is that the System has not conducted dynamic open market operations with regard to total reserves since 1949 nor with regard to free reserves since 1945! This conclusion, that ". . . the dynamic element, . . ., is zero for all but 5 of the individual annual periods" (P. 662), results from the fact that Bonomo and Schotta have equated dynamic operations with a monotonic time trend variable-the equation constant in a first difference regression.5 There are several plausable reasons why Bonomo and Schotta's regression constants are not statistically significant. First, it may be due to the strong seasonality of the unadjusted weekly data. Secondly, it may 1.

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Empirical studies of the announcement effects of equity offerings have generally defined the event date as the earlier of the SEC registration date or the first mention in the Wall Street Journal (WSJ), the implicit assumption being that the two types of announcements are equally informative. This study examines whether the source of the event announcement might influence a study's results and whether subsequent announcements from other sources elicit a market reaction. Specifically, this paper investigates whether Dow Jones News Wire (DJNW) announcements that differ in timing from either of these information events elicit a market response and, more important, whether impacts from the DJNW announcements alter the validity of the widely used methodology. The results of the paper indicate that, for issues that are not mentioned in the WSJ Index, there is a negative and significant return on the registration date. However, no matter whether the registration occurs before or after its mention on the DJNW, the share price reaction is greater from mention on the DJNW than at registration. This finding leads to the conclusion that the DJNW should be used as the event date and that press coverage