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Seasoned Equity Offerings Operating Performance And Overconfidence
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Book Synopsis Seasoned Equity Offerings, Operating Performance and Overconfidence by : Panagiotis Andrikopoulos
Download or read book Seasoned Equity Offerings, Operating Performance and Overconfidence written by Panagiotis Andrikopoulos and published by . This book was released on 2009 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Prior research on seasoned equity offerings in UK shows that equity issuers report a significant long-term under performance in the period following the event. However, the factors contributing to such under performance are not yet fully explored. Using a sample of rights issues for the period 1988-1998, this study suggest that the long-term under performance is significantly related to a deterioration of companies' operating fundamentals in the post-offering period. Further comparison between quot;Bestquot; and quot;Worstquot; post-issue performers reveals that long-term under performance is predominantly robust in the case of fast growing firms with over-optimistic management. This evidence is consistent with the managerial overconfidence and quot;empire-buildingquot; hypotheses.
Book Synopsis Strategic R&D Investment around Seasoned Equity Offerings by : Yu Wang
Download or read book Strategic R&D Investment around Seasoned Equity Offerings written by Yu Wang and published by . This book was released on 2005 with total page 112 pages. Available in PDF, EPUB and Kindle. Book excerpt: Focusing on high-technology issuers, this study provides new evidence that managers strategically overinvest in research and development (R&D) projects prior to seasoned equity offerings (SEOs). It corroborates the theoretical prediction that managers with short-term valuation pressure tend to overinvest in long-term projects to elevate investors’ growth expectations (Bebchuk and Stole, 1993). I find that issuers with more intensive pre-SEO R&D expenditures exhibit lower productivity in terms of innovative output and operating performance following offerings, which is a primary manifestation of overinvestment. Such issuers also have higher price run-ups prior to offerings and lower long-term stock returns thereafter, suggesting that investors initially overestimate the future benefits of R&D expenditures but are subsequently disappointed by their low productivity. In additional analysis, I document that analysts make higher long-term growth forecasts prior to offerings for R&D intensive issuers, whereas such issuers are more likely to miss analysts’ sales forecasts subsequently relative to non-intensive issuers. This evidence suggests that analysts fare no better than investors in correctly anticipating the future benefits of pre-SEO R&D expenditures. Further analysis of managers’ disclosure of the intended use of proceeds indicates that R&D intensive issuers tend to provide more non-financial R&D information to reinforce investors’ growth expectations. Finally, I provide evidence that the documented strategic R&D investment behavior among seasoned issuers is not explained by managerial overconfidence.
Book Synopsis The Operating Performance of Firms Conducting Seasoned Equity Offerings by : Tim Loughran
Download or read book The Operating Performance of Firms Conducting Seasoned Equity Offerings written by Tim Loughran and published by . This book was released on 1998 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Recent studies have documented that firms conducting seasoned equity offerings have inordinately low stock returns during the five years after the offering, following a sharp run-up in the year prior to the offering. This paper documents that the operating performance of issuing firms shows substantial improvement prior to the offering, but then deteriorates. The multiples at the time of the offering, however, do not reflect an expectation of deteriorating performance. Issuing firms are disproportionately high-growth firms, but issuers have much lower subsequent stock returns than nonissuers with the same growth rate.
Book Synopsis Seasoned Equity Issuers' R&D Investments by : Hong Qian
Download or read book Seasoned Equity Issuers' R&D Investments written by Hong Qian and published by . This book was released on 2014 with total page 49 pages. Available in PDF, EPUB and Kindle. Book excerpt: It is well-known that investors often react negatively to the announcements of seasoned equity offerings (SEOs). We posit that issuers can use positive discretionary (higher-than-expected) Ramp;D investments before the SEO to signal their investment prospects to mitigate the negative announcement effect. Alternatively, positive discretionary Ramp;D may be attributed to managerial over-optimism about future returns of Ramp;D investments. We find strong support for signaling hypothesis among high-tech issuers: Investors respond more favorably to the SEO announcements of high-tech issuers with positive discretionary Ramp;D; these issuers are more likely to use new capital in future Ramp;D; and they produce better post-SEO operating performance. In contrast, we find some evidence of managerial over-optimism among low-tech issuers: Investors tend to penalize low-tech firms with positive discretionary Ramp;D at SEO announcements; they are more likely to hold new capital as cash; and they fail to produce better post-SEO operating performance.
Book Synopsis Seasoned Equity Offerings, Investment Risk and Financial Constraints by : Cécile Carpentier
Download or read book Seasoned Equity Offerings, Investment Risk and Financial Constraints written by Cécile Carpentier and published by . This book was released on 2008 with total page 33 pages. Available in PDF, EPUB and Kindle. Book excerpt: We evidence that Canadian seasoned equity issuers post a significant pre-issue stock price run-up and a significant post-issue underperformance, even when controlling for an investment risk factor, as in Lyandres, Sun and Zhang (2008). Our results do not corroborate the investment/risk hypothesis; neither are our results in line with the timing hypothesis: Canadian issuers exhibit poor operating performance, are generally financially constrained or distressed, and not able to time the market. We propose that the observed pattern can be attributed to a conjunction of the positive effect of the slack in the financial constraint and irrational pricing. Our results confirm this proposition.
Book Synopsis Seasoned Equity Offering and Operating Performance by : Naihan Bing
Download or read book Seasoned Equity Offering and Operating Performance written by Naihan Bing and published by . This book was released on 2013 with total page 136 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Seasoned Equity Offerings and the Short and Long-run Performance of Initial Public Offerings by : Mario Levis
Download or read book Seasoned Equity Offerings and the Short and Long-run Performance of Initial Public Offerings written by Mario Levis and published by . This book was released on 1994 with total page 66 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis IPOs and SEOs in the US Real Estate Industry by : Philip Radner
Download or read book IPOs and SEOs in the US Real Estate Industry written by Philip Radner and published by Springer. This book was released on 2017-01-20 with total page 74 pages. Available in PDF, EPUB and Kindle. Book excerpt: Philip Radner analyzes equity financing phenomena and researches IPO underpricing and SEO announcement effects using data sets for US REITs. Moreover, he discusses underpricing theories and their applicability in the REIT context and gives a theoretical background on IPOs and on underpricing in particular. With this background at hand, the results out of this dissertation imply to focus on the wording in IPO documents as it can help to maximize IPO proceeds. In addition, he analyzes how to better time and announce subsequent equity financing events. It is expected that significantly underpriced issues attract more investors and that subsequent SEOs are then easier to conduct and typically raise more capital.
Book Synopsis Performance of Seasoned Equity Offerings in a Risk Adjusted Environment by : David E. Allen
Download or read book Performance of Seasoned Equity Offerings in a Risk Adjusted Environment written by David E. Allen and published by . This book was released on 2000 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Long-Term Performance of Seasoned Equity Offerings by : Narasimhan Jegadeesh
Download or read book Long-Term Performance of Seasoned Equity Offerings written by Narasimhan Jegadeesh and published by . This book was released on 2009 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: I investigate the long-term performance of firms that issue seasoned equity relative to a variety of benchmarks. I find that these firms significantly underperform all of my benchmarks over the five years following the equity issues. Across SEOs, I find similar levels of underperformance for both small firms and large firms, and both growth firms and value firms. The paper also shows that factor-model benchmarks are misspecified. Hence inferences on SEO underperformance based on such benchmarks are misleading. I also find that SEOs underperform their benchmarks by twice as much within earnings announcement windows as they do outside these windows.
Book Synopsis Long Run Underperformance of Seasoned Equity Offerings by : Victor Soucik
Download or read book Long Run Underperformance of Seasoned Equity Offerings written by Victor Soucik and published by . This book was released on 2000 with total page 45 pages. Available in PDF, EPUB and Kindle. Book excerpt:
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 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 The Performance of Seasoned Equity Offerings in the Long-term Perspective by : Adrian Cremer
Download or read book The Performance of Seasoned Equity Offerings in the Long-term Perspective written by Adrian Cremer and published by . This book was released on 2000 with total page 130 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis A THEORY OF OVERCONFIDENCE, SELF-ATTRIBUTIONS AND SECURITY MARKET UNDER- AND OVERRACTIONS by : KENT DANIEL
Download or read book A THEORY OF OVERCONFIDENCE, SELF-ATTRIBUTIONS AND SECURITY MARKET UNDER- AND OVERRACTIONS written by KENT DANIEL and published by . This book was released on 1998 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt:
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.
Book Synopsis Post Offering Earnings Performance of Firms that Issue Seasoned Equity by : Hei Wai Lee
Download or read book Post Offering Earnings Performance of Firms that Issue Seasoned Equity written by Hei Wai Lee and published by . This book was released on 1998 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This study finds that growth firms experience significant unanticipated deterioration in their earnings performance following their seasoned equity offerings (SEO), but mature firms do not share the same negative experience. This finding is consistent with the findings of long run post offering stock price underperformance documented in the literature. However, it is inconsistent with the findings of a weak positive impact of growth opportunities on the stock price reaction to the SEO announcement. The negative role of growth opportunities also contradicts the predictions of signaling models that growth potential of the issuing firm has a positive impact on the information content of the SEO. Overall, the findings in this study are consistent with the general implication of the overvaluation hypothesis that managers issue equity securities when they know their firm is not as valuable as what the market believes.
