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Seasoned Equity Offerings (seasoned + equity_offering)
Selected AbstractsAnalyst Coverage and the Cost of Raising Equity Capital: Evidence from Underpricing of Seasoned Equity Offerings,CONTEMPORARY ACCOUNTING RESEARCH, Issue 3 2008Robert M. Bowen First page of article [source] The Pricing of French Unit Seasoned Equity OfferingsEUROPEAN FINANCIAL MANAGEMENT, Issue 1 2001Pierre Chollet Units are bundles of common stock and warrants. By issuing units, firms precommit to a future and uncertain seasoned offering at the exercise price of the warrants. This study shows that the issuance of units seasoned offerings in France is accompanied by significant abnormal returns of on average 9,12%, depending on the computing methods. Underpricing increases with the risk of the issuer and the relative size of the future seasoned equity issue linked to warrant exercises. Our results are consistent with our signaling hypothesis. [source] Order Flow Patterns around Seasoned Equity Offerings and their Implications for Stock Price Movements,INTERNATIONAL REVIEW OF FINANCE, Issue 1-2 2005SAHN-WOOK HUH ABSTRACT In this study, we employ order imbalance measures to provide evidence that there is cross-sectional heterogeneity in investor reactions to seasoned equity offerings (SEOs). The normally positive relation between imbalances and returns disappears for trade number imbalances but remains intact for dollar imbalances following SEOs. The return-imbalance delinkage is most pronounced for SEO stocks in which institutions (non-institutions) are net sellers (buyers). We also find that the SEO portfolio in which large institutional investors are net sellers strongly underperforms the complementary portfolio in which they are net buyers. [source] The Effects of Pre-issue Information Releases on Seasoned Equity OfferingsJOURNAL OF BUSINESS FINANCE & ACCOUNTING, Issue 9-10 2008Yi-Mien Lin Abstract:, Because of information asymmetry, managers tend to make pre-issue disclosures to reduce the costs of seasoned equity offerings. This paper discusses whether pre-issue information releases of major investments, financial forecast revisions and dividends help the investors to anticipate seasoned equity offerings and assist in reducing the information asymmetry when the managers announce equity issues. We analyze price and trading volume reactions to equity issue announcements to infer the degree of information asymmetry. Consistent with our expectations, we find that these three types of pre-issue disclosures can help investors to anticipate equity issues. However, after controlling for anticipation and cross-sectional variation in uncertainty, we find none of the disclosures are capable of reducing the price drop at issue announcement, and only the disclosures of increased cash dividends have the effect of reducing the negative trading volume reactions. In addition, both the price and trading volume reactions are not related to the intervals between the disclosures and the issue announcements. [source] The Impact of Regulation FD on Institutional Investor InformativenessFINANCIAL MANAGEMENT, Issue 3 2010Douglas O. Cook Although there is conflicting evidence and resulting skepticism regarding the value provided by professional investment management, Gibson, Safieddine, and Sonti (2004) document institutional investor informativeness relative to seasoned equity offering (SEO) purchases. We find that Regulation Fair Disclosure's significantly reduces institutional investors' ability to identify mispriced SEO firms. Informativeness is diminished not by investors following analysts who have experienced a reduction in forecasting accuracy, but limiting investors' direct access to private information. This information loss is replaced by reliance on a greater number of public information variables resulting in less consideration for prudence proxies and a liquidity motive and more for higher price momentum. [source] Do Initial Public Offering Firms Purchase Analyst Coverage with Underpricing?THE JOURNAL OF FINANCE, Issue 6 2004MICHAEL T. CLIFF ABSTRACT We report that initial public offering (IPO) underpricing is positively related to analyst coverage by the lead underwriter and to the presence of an all-star analyst on the research staff of the lead underwriter. These findings are robust to controls for other determinants of underpricing and to controls for the endogeneity of underpricing and analyst coverage. In addition, we find that the probability of switching underwriters between IPO and seasoned equity offering is negatively related to the unexpected amount of post-IPO analyst coverage. These findings are consistent with the hypothesis that underpricing is, in part, compensation for expected post-IPO analyst coverage from highly ranked analysts. [source] Why Do Firms Issue Equity after Splitting Stocks?FINANCIAL REVIEW, Issue 3 2003Ranjan D'Mello G14/G30/G32 Abstract This paper examines the motivations of firms that conduct seasoned equity offerings (SEOs) after splitting stocks. We find no difference in equity announcement and issue period returns between these firms and other equity-issuing firms, suggesting that firms do not split stocks to reveal information and reduce adverse selection costs at the subsequent SEO. However, because investors react positively to split announcements, firms that issue equity after splitting stocks sell new shares at a higher price and raise more funds. We also find that firms split stocks to make the subsequent SEO more marketable to individual investors who are attracted to low-priced shares. [source] Order Flow Patterns around Seasoned Equity Offerings and their Implications for Stock Price Movements,INTERNATIONAL REVIEW OF FINANCE, Issue 1-2 2005SAHN-WOOK HUH ABSTRACT In this study, we employ order imbalance measures to provide evidence that there is cross-sectional heterogeneity in investor reactions to seasoned equity offerings (SEOs). The normally positive relation between imbalances and returns disappears for trade number imbalances but remains intact for dollar imbalances following SEOs. The return-imbalance delinkage is most pronounced for SEO stocks in which institutions (non-institutions) are net sellers (buyers). We also find that the SEO portfolio in which large institutional investors are net sellers strongly underperforms the complementary portfolio in which they are net buyers. [source] The Effects of Pre-issue Information Releases on Seasoned Equity OfferingsJOURNAL OF BUSINESS FINANCE & ACCOUNTING, Issue 9-10 2008Yi-Mien Lin Abstract:, Because of information asymmetry, managers tend to make pre-issue disclosures to reduce the costs of seasoned equity offerings. This paper discusses whether pre-issue information releases of major investments, financial forecast revisions and dividends help the investors to anticipate seasoned equity offerings and assist in reducing the information asymmetry when the managers announce equity issues. We analyze price and trading volume reactions to equity issue announcements to infer the degree of information asymmetry. Consistent with our expectations, we find that these three types of pre-issue disclosures can help investors to anticipate equity issues. However, after controlling for anticipation and cross-sectional variation in uncertainty, we find none of the disclosures are capable of reducing the price drop at issue announcement, and only the disclosures of increased cash dividends have the effect of reducing the negative trading volume reactions. In addition, both the price and trading volume reactions are not related to the intervals between the disclosures and the issue announcements. [source] The Multijurisdictional Disclosure System and Value of Equity OfferingsJOURNAL OF INTERNATIONAL FINANCIAL MANAGEMENT & ACCOUNTING, Issue 1 2006Usha R. Mittoo The Canada and US multijurisdictional disclosure system (MJDS) implemented in 1991 lowered the indirect barriers for investors and issuers by easing reporting and disclosure requirements for cross-border issues. This paper examines the impact of the MJDS and related regulatory changes on Canada,US equity market segmentation using a sample of Canadian seasoned equity offerings in the 1991,1998 period. We find that the number of cross-border issues by Canadian firms increased, and the typical negative stock price reaction that accompanies seasoned equity issues declined over time, supporting increased integration between the two markets after the MJDS. We also document that cross-border issues experience about 1.4 per cent lower negative stock price reaction compared with domestic issues, consistent with Canada,US market segmentation. We find mixed support for Merton's (1987) investor recognition hypothesis. While Canadian firms cross-listed in the US experience a less adverse price reaction to their cross-border offerings compared with their non-US-listed peers, there is no significant difference between the two groups in the case of purely domestic issues. [source] CEO compensation and the seasoned equity offering decisionMANAGERIAL AND DECISION ECONOMICS, Issue 5 2006Joseph F. Brazel Empirical research on seasoned equity offerings indicates that the decision to make an SEO typically engenders a decline in firm value, as investors interpret this decision as a signal of poor financial health or that the stock is overpriced. Here, we add to the literature by analyzing the short-term market reaction to SEO announcements and the chief executive officer's link to firm performance (i.e. the proportion of CEO equity-based compensation). Results support the hypothesis that investors are more likely to view the announcement of an SEO as a last resort source of capital when the proportion of CEO equity-based compensation is high. In such cases of high equity-based compensation, our findings indicate that the SEO announcement provides an incremental signal of financial distress above that provided by financial statements. We also find this relationship (last resort signal) to be stronger when large information asymmetries exist between management and investors. Thus, managers should consider the ramifications of executive compensation structure when considering whether to make an SEO. Copyright © 2006 John Wiley & Sons, Ltd. [source] | ||||||||||