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Do Firms Time Seasoned Equity Offerings Evidence From Seos Issued Shortly After Ipos
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Book Synopsis Do Firms Time Seasoned Equity Offerings? Evidence from SEOs Issued Shortly after IPOs by : Yi Jiang
Download or read book Do Firms Time Seasoned Equity Offerings? Evidence from SEOs Issued Shortly after IPOs written by Yi Jiang and published by . This book was released on 2014 with total page 39 pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine whether firms take advantage of brief windows of opportunity to time seasoned equity offerings (SEOs) when their equity is substantially overvalued given managers' private information. We find that firms experiencing larger IPO underpricing, larger stock price run-ups after the IPO, and larger IPO offer size tend to return to the market with an SEO earlier than the others. Firms which issue SEOs quickly after an IPO underperform in comparison to their peers. The mean three-day abnormal return of firms issuing SEOs within six months of IPOs is 2.69% lower than that of firms issuing SEOs six months or more following their IPOs. Firms issuing SEOs shortly after their IPOs also exhibit worse long-run stock returns and operating performance. The results are most consistent with the hypothesis that managers with private information time SEOs in ways that benefit existing shareholders.
Book Synopsis Timing of Seasoned Equity Offerings by : Hong Qian
Download or read book Timing of Seasoned Equity Offerings written by Hong Qian and published by . This book was released on 2014 with total page 32 pages. Available in PDF, EPUB and Kindle. Book excerpt: Using a sample of 6,198 US firms that went public from 1975-2004, this paper documents that firms often return for a new round of equity issuance shortly after the preceding one. First SEOs following the IPO are more likely to be conducted at a faster speed than subsequent (follow-on) SEOs. Duration analysis shows that recent stock returns and future growth opportunities are important determinants of the timing of SEOs. First SEOs differ from follow-on SEOs in two aspects: (1) Growth opportunities correlated with the overall economic growth are more important for follow-on SEOs than for first SEOs. (2) First SEOs are more driven by the incentive to time the stock market, whereas follow-on SEOs are more driven by growth needs.
Book Synopsis Initial Public Offerings, Subsequent Seasoned Equity Offerings, and Long-Run Performance by : Wolfgang Bessler
Download or read book Initial Public Offerings, Subsequent Seasoned Equity Offerings, and Long-Run Performance written by Wolfgang Bessler and published by . This book was released on 2002 with total page 41 pages. Available in PDF, EPUB and Kindle. Book excerpt: The objective of this study is to investigate the long-run performance of initial public offerings in Germany for the period from 1977 to 1995. Of particular interest is to examine whether underpricing and the timing of subsequent seasoned equity offerings may help to explain why some firms have substantial positive and others substantial negative long-run abnormal holding period returns after going public. We find significant empirical evidence that firms that raised additional funds after an IPO through a seasoned equity offering outperformed the market. There is a significant difference in returns to the firms that had no subsequent equity offering. A comparison of seasoned equity offerings of IPOs and of established firms suggests that the information asymmetry is more pronounced for IPO firms.
Book Synopsis Handbook of Research on IPOs by : Mario Levis
Download or read book Handbook of Research on IPOs written by Mario Levis and published by Edward Elgar Publishing. This book was released on 2013-11-29 with total page 599 pages. Available in PDF, EPUB and Kindle. Book excerpt: The chapters offer some important new insights into issues that will be of interest not only to the academic community but also to professionals involved in the preparation, structure and execution of such transactions, market regulators, and private a
Book Synopsis IPOs and SEOs, Real Investments, and Market Timing by : Kavita Wadhwa
Download or read book IPOs and SEOs, Real Investments, and Market Timing written by Kavita Wadhwa and published by . This book was released on 2016 with total page 47 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper uses market-to-book ratio decomposition to examine whether firms that issue equity through initial public offerings or seasoned equity offerings exploit mispricing because of investor enthusiasm or to finance growth opportunities. We find strong evidence that, on average, firms do not issue mispriced stocks to exploit investors but, rather, to finance their investment opportunities in the form of real assets, inventory, and capital expenses. Firms that issue overvalued stocks with the view to increase their cash holdings experience poor long-run performance. Overall, our results show that stock mispricing drives equity offerings through IPOs and SEOs. Nonetheless, high transparency and balanced regulation in the marketplace deter issuing firms from investing their proceeds in non-value-creating activities. This evidence is robust to alternative measures of valuation and long-run performance.
Book Synopsis Seasoned Equity Offerings by : Mark D. Walker
Download or read book Seasoned Equity Offerings written by Mark D. Walker and published by . This book was released on 2008 with total page 34 pages. Available in PDF, EPUB and Kindle. Book excerpt: Using a sample of 438 firms that issued seasoned equity, we investigate the ex ante reasons stated by the firm for the use of capital, the actual ex post use of funds, and the market reaction to this information. We find that, regardless of the stated use of funds, firms increase capital expenditures and research and development following an SEO. In addition, firms increase their long term debt following an SEO, even when the stated reason for the capital is to pay down debt. The market reacts more favorably to the anticipated investment increases if the firm provides specific plans for the use of the soon-to-be-raised capital. The evidence is consistent with the view that agency issues are important factors in SEOs.
Book Synopsis Why Do IPO Firms Conduct Primary Seasoned Equity Offerings? by : Maretno A. Harjoto
Download or read book Why Do IPO Firms Conduct Primary Seasoned Equity Offerings? written by Maretno A. Harjoto and published by . This book was released on 2003 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This study examines the reason behind the IPO firm's decision to conduct a primary seasoned equity offering (SEO). First, we develop a two-period model of blockholder incentives starting from the IPO stage. The model suggests that the blockholder has an incentive to conduct a SEO after the IPO when the firm is experiencing growth that was not anticipated at the IPO stage. Using a sample of IPO firms during 1992 to 1997, we find that IPO firms with higher unanticipated positive growth are more likely to conduct a SEO during four years after their IPOs. We find that the firm's unanticipated shock and growth positively affect the relative size of the firm's seasoned equity offering. We also find that the firm's risk measure reduces the probability of conducting a SEO and reduces the relative size of a SEO.
Book Synopsis The Oxford Handbook of Entrepreneurial Finance by : Douglas Cumming
Download or read book The Oxford Handbook of Entrepreneurial Finance written by Douglas Cumming and published by OUP USA. This book was released on 2012-03-22 with total page 937 pages. Available in PDF, EPUB and Kindle. Book excerpt: Provides a comprehensive picture of issues dealing with different sources of entrepreneurial finance and different issues with financing entrepreneurs. The Handbook comprises contributions from 48 authors based in 12 different countries.
Book Synopsis The Long-run Performance of Seasoned Equity Offerings with Rights by : Michel Dubois
Download or read book The Long-run Performance of Seasoned Equity Offerings with Rights written by Michel Dubois and published by . This book was released on 2000 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Handbook of Corporate Finance by : Bjørn Espen Eckbo
Download or read book Handbook of Corporate Finance written by Bjørn Espen Eckbo and published by Elsevier. This book was released on 2007-05-21 with total page 559 pages. Available in PDF, EPUB and Kindle. Book excerpt: Judging by the sheer number of papers reviewed in this Handbook, the empirical analysis of firms' financing and investment decisions—empirical corporate finance—has become a dominant field in financial economics. The growing interest in everything "corporate is fueled by a healthy combination of fundamental theoretical developments and recent widespread access to large transactional data bases. A less scientific—but nevertheless important—source of inspiration is a growing awareness of the important social implications of corporate behavior and governance. This Handbook takes stock of the main empirical findings to date across an unprecedented spectrum of corporate finance issues, ranging from econometric methodology, to raising capital and capital structure choice, and to managerial incentives and corporate investment behavior. The surveys are written by leading empirical researchers that remain active in their respective areas of interest. With few exceptions, the writing style makes the chapters accessible to industry practitioners. For doctoral students and seasoned academics, the surveys offer dense roadmaps into the empirical research landscape and provide suggestions for future work.*The Handbooks in Finance series offers a broad group of outstanding volumes in various areas of finance*Each individual volume in the series should present an accurate self-contained survey of a sub-field of finance*The series is international in scope with contributions from field leaders the world over
Book Synopsis The Quarterly Review of Economics and Finance by :
Download or read book The Quarterly Review of Economics and Finance written by and published by . This book was released on 2009-11 with total page 284 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis IPOs and Equity Offerings by : Ross Geddes
Download or read book IPOs and Equity Offerings written by Ross Geddes and published by Elsevier. This book was released on 2003-06-06 with total page 273 pages. Available in PDF, EPUB and Kindle. Book excerpt: An initial public offering (IPO) is one of the most significant events in corporate life. It follows months, even years of preparation. During the boom years of the late 1990s bull market, IPOs of growth companies captured the imagination and pocketbooks of investors like never before. This book goes behind the scenes to examine the process of an offering from the decision to go public to the procedures of a subsequent equity offering. The book is written from the perspective of an experienced investment banker describing the hows and whys of IPOs and subsequent equity issues. Each aspect of an IPO is illustrated with plenty of international examples pitched alongside relevant academic research to offer a combination of theoretical rigour and practical application. Topics covered are: - the decision to go public- legal and regulatory aspects of an offering; marketing and research- valuation and pricing- allocations of shares to investors - examination of fees and commissions* Global perpective: UK, European and US practices, regulations and examples, and case studies* First hand experience written by an IPO trader with academic rigour* Includes the changes in the market that resulted from 1998-2000 equity boom
Book Synopsis The Long-Run Performance of Firms that Withdraw Seasoned Equity Offerings by : Brian L. Betker
Download or read book The Long-Run Performance of Firms that Withdraw Seasoned Equity Offerings written by Brian L. Betker and published by . This book was released on 1998 with total page 32 pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine the long-run stock price and operating performance of companies that withdraw seasoned equity offerings. Firms that withdraw an offering provide an opportunity to examine the long-run impact of the intent to issue shares, independent of any agency problems that might be intensified by the actual acquisition of equity capital. As in completed SEOs, long-horizonstock returns to sample firms are substantially lower than returns to control firms. Long-run operating performance is similarly poor. Long run stock price performance is worst among high market-to-book assets firms that withdraw equity issues in hot SEO markets. The evidence is consistent with a model in which firms attempt to sell overvalued shares to a market that doesn't react sufficiently to the implications of the action, even if the shares are not actually issued.
Book Synopsis Do Firms Time Equity Offerings? Evidence from the 1930s and 1940s by : Timothy R. Burch
Download or read book Do Firms Time Equity Offerings? Evidence from the 1930s and 1940s written by Timothy R. Burch and published by . This book was released on 2012 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: We investigate whether the timing of equity sales to exploit market overvaluation may account for the reported poor post-offer stock performance of firms issuing equity. We posit that rights offers, targeted to a firm's current shareholders, are less likely to be timed to exploit overvaluation. Our study compares firm commitment and rights offerings during 1933-1949 when rights offers were common. We find that abnormal returns for firms electing the firm commitment method were significantly negative over the year following the offer, while those for firms using rights were not. This suggests that firm commitments were timed, while rights offers were not.
Book Synopsis Seasoned Equity Issues With 'Soft' Information by : Yawen Jiao
Download or read book Seasoned Equity Issues With 'Soft' Information written by Yawen Jiao and published by . This book was released on 2010 with total page 56 pages. Available in PDF, EPUB and Kindle. Book excerpt: We develop a model of seasoned equity issues (SEOs) under asymmetric information where, in addition to observing the firm's issue/no issue decision, outsiders obtain quot;soft informationquot; signals about firms through noisy voluntary disclosures made by firms or information production by outsiders. We show that, if sufficiently precise soft information is available to outsiders, firms' equity issue behavior is significantly altered in equilibrium relative to that in existing models of SEOs. In particular, while existing models predict that the announcement effect to a public offering of equity will always be negative, our model predicts that the announcement effect will be positive for a significant fraction of SEOs. We predict that the announcement effect will be positive or negative depending on the realization of outsiders' soft information, the value of the firm's assets-in-place, and the net present value of its growth opportunities, with firms about which outsiders have more favorable soft information receiving algebraically larger (more positive or less negative) SEO announcement effects. We also have predictions for the relationship between the precision of outsiders' soft information and the amount of underinvestment in that firm, and for a firm's debt to equity ratio. Finally our model provides a rationale for the existence of quot;investor relationsquot; departments in many firms. We test two of the predictions of our model using stock price data of a sample of firms making equity issues, and using revisions in analyst recommendations and earnings forecasts as proxies for the realizations of outsiders' soft information signals about these firms. The evidence is consistent with the predictions of our model.
Book Synopsis Underwriting Services and the New Issues Market by : George J. Papaioannou
Download or read book Underwriting Services and the New Issues Market written by George J. Papaioannou and published by Academic Press. This book was released on 2017-07-27 with total page 334 pages. Available in PDF, EPUB and Kindle. Book excerpt: Underwriting Services and the New Issues Market integrates practice, theory and evidence from the global underwriting industry to present a comprehensive description and analysis of underwriting practices. After covering the regulation and mechanics of the underwriting process, it considers economic topics such as underwriting costs and compensation, the pricing of new issues, the stock price and operating performance of issuing firms, the evaluation of new issue decisions, and an analysis of the many choices issuers face in structuring new issues. Unlike other books, it systematically develops a critical perspective about underwriting practices, both in the U.S. and international markets, and with a level of detail unavailable elsewhere and an approach that reveals how financial institutions deliver underwriting services. Underwriting Services and the New Issues Market delivers an innovative and long overdue look at security issuance. Foreword by Frank Fabozzi - Covers underwriting contracts and arrangements on pricing and costs - Focuses on the financial consequences of the issuance decision for the firm - Describes and evaluates decisions regarding the features and structure of new security offerings.
Book Synopsis Equity Issue Under-Performance and the Timing of Security Issues by : Li-Lan Cheng
Download or read book Equity Issue Under-Performance and the Timing of Security Issues written by Li-Lan Cheng and published by . This book was released on 1998 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Earlier studies have shown that seasoned equity offerings (SEO) are poor investments. For up to five years after the SEO, they significantly under-perform the market indexes as well comparable-sized non-issuers. This paper extends these studies and shows evidence of intentional timing by equity issuers. For up to three years after the SEO, the under-performance is much more severe for the stocks of issuers that do not use the proceeds for capital investment than those that invest the proceeds. This suggests that firms that have no good use for the proceeds may offer equities just to take advantage of over-pricing of their stock by the market. The use of proceeds can be predicted using information available at the time of issue, thus avoiding using ex post information to predict returns. Furthermore, the stocks of bond issuers do not under-perform the market; and the difference between the investing and non-investing bond issuers is not significant.
