Download or read book Discounting and Underpricing in Seasoned Equity Offerings written by Oya Altinkilic and published by . This book was released on 2013 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Discounting and underpricing spread across most seasoned equity offers in the 1990s and were four to five times higher than in earlier years - particularly for riskier and more difficult to market offers, which were more prevalent. Analyses suggest that expected discounting is a cost of uncertainty about firm value, marketing new shares, and acquiring information that raises the offer price. Stockholders appear to recognize this as they incorporate predictable discounting in stock prices when equity offers are first announced. The surprise component of discounting, which reflects the lead bank's final adjustment to the offer price after the close of trading the night before the offer, releases information that often causes economically large swings in firm value on the offer day. The evidence points to disparities between the issuer's closing price and the price suggested in the lead bank's final order book as a primary source of information. The discount surprise appears to be an effective mechanism used by lead banks to update capital suppliers with that eleventh hour information before they commit their funds.

Download or read book The Puzzling Increase in the Underpricing of Seasoned Equity Offerings written by Kenneth Kim and published by . This book was released on 2004 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Using a sample of over 3,000 seasoned equity offerings (SEOs) from 1983 to 1998, we test the hypothesis that the U.S. Securities and Exchange Commission's Rule 10b-21, which disallows the covering of short positions with newly issued SEOs, makes pre-offer stock prices less informative, which, in turn, causes the new seasoned equity to be priced at a discount. Consistent with the hypothesis, we find that the year the rule went into effect coincides with the year from which we begin observing significant SEO discounts. Further, we find that ex ante uncertainty and SEO discounts are positively related. We also conduct tests specifically related to short selling, and we also consider an exhaustive set of alternative explanations for the discounts. Based on all of the evidence, we conclude that it is the rule that makes issue discounts larger in the 1990s.

Download or read book Discounting and Underpricing of REIT Seasoned Equity Offers written by Kimberly Goodwin and published by . This book was released on 2013 with total page 20 pages. Available in PDF, EPUB and Kindle. Book excerpt: For seasoned equity offerings, the discounting of the offer price from the closing price on the previous day is influenced by the level of asymmetric information surrounding the firm and the offering, as well as compensation to investors willing to purchase new shares. Discounting is important for the offering firm because it represents money left on the table, and this is the first paper to examine the degree of discounting and its determinants for real estate investment trusts (REITs). Studying the discounting of REIT seasoned equity offers from 1994 to 2006, this paper provides support for both the placement cost and value uncertainty hypotheses of discounting. When new REIT shares are more difficult to place with investors and there is less consensus about the valuation of REIT shares, investors will require greater discounting of the offer price.

Download or read book The Underpricing of Seasoned Equity Offerings written by Kenneth Kim and published by . This book was released on 2001 with total page 45 pages. Available in PDF, EPUB and Kindle. Book excerpt: Using a sample of over 3,000 seasoned equity offerings (SEOs) from 1983 to 1998, we find significant SEO discounts (underpricing) during the 1990s, but not during the 1980s. The natural question is: Why do we observe a difference between the 1980s and 1990s? Among the different explanations that we considered, one stood out as being most culpable: In 1988, the SEC adopted Rule 10b-21 to curb manipulative short-selling activities preceding equity issue dates. Thus, this change in the regulatory environment for SEOs may have caused the larger discounts. Indeed, the year the Rule went into effect coincides with the year from which we begin observing significant SEO discounts. We considered an exhaustive set of alternative explanations, including new theories that have arisen out of the recent IPO underpricing literature, but our overall conclusion remains intact: The Rule's restriction on short-selling, which makes pre-offer day prices less informative, appears to have made issue discounts larger in the 1990s.

Download or read book The Determinants of Underpricing for Seasoned Equity Offers written by Shane A. Corwin and published by . This book was released on 2003 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Seasoned offers were underpriced by an average of 2.2 percent during the 1980s and 1990s, with the discount increasing substantially over time. The increase appears to be related to Rule 10b-21 and to economic changes affecting both IPOs and SEOs. Consistent with temporary price pressure, underpricing is positively related to offer size especially for securities with relatively inelastic demand. Underpricing is also positively related to price uncertainty and, after Rule 10b-21, to the magnitude of preoffer returns. Additionally, I find that underpricing is significantly related to underwriter pricing conventions such as price rounding and pricing relative to the bid quote.

Download or read book Investigations Into the Underpricing of Seasoned Equity Offerings and the Cost of Equity written by Anh Đúc Ngô and published by . This book was released on 2013 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

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:

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.

Download or read book The Pricing of French Unit Seasoned Equity Offerings written by Pierre CHOLLET and published by . This book was released on 2015 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: 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 to 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.

Download or read book The Choice of Seasoned Equity Offerings Methods and Long Term Returns written by Balasingham Balachandran and published by . This book was released on 2010 with total page 55 pages. Available in PDF, EPUB and Kindle. Book excerpt: Seasoned equity offerings (SEOs) in the UK provide valuable choices to the issuer in terms of renounceability and control dilution. This is especially the case following the removal of the size restriction of pound;15 m on share placements to institutional investors in January 1996. We formulate a set of hypotheses from a quality-signalling perspective, affording an analysis of the key interrelations between renounceability, control dilution, shareholder takeup, and subscription price discount. We analyze SEOs from two perspectives: market reaction to the announcement, and identification of the factors driving the choice of issue type. Generally, we find strong support for our predictions - most notably that: high-quality firms signal quality via lower discounts and/or pre-renouncements; high-quality issuers have lower idiosyncratic risk; firms with widely dispersed ownership structures and firms with the largest market capitalizations will choose standalone placements with book-building; and firms with higher (lower) ownership concentration and lower (higher) shareholder takeup will choose fixed-price placements (rights offerings).

Download or read book Beyond the Random Walk written by Vijay Singal and published by Financial Management Association Survey and Synthesis Series. This book was released on 2006 with total page 369 pages. Available in PDF, EPUB and Kindle. Book excerpt: In an efficient market, all stocks should be valued at a price that is consistent with available information. But as financial expert Singal points out, there are circumstances under which certain stocks sell at a price higher or lower than the right price. Here he discusses ten such anomalous prices and shows how investors might--or might not--be able to exploit these situations for profit.

Download or read book Institutional Trading Information Production and the SEO Discount written by Yawen Jiao and published by . This book was released on 2008 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt: We develop a model of the ...

Download or read book Short Selling Around Seasoned Equity Offerings written by Tyler R. Henry and published by . This book was released on 2017 with total page 61 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper uses daily short selling data to examine whether short selling around seasoned equity offerings (SEOs) reflects informed or manipulative trading strategies. We find no evidence of informed short selling around SEO announcements. Around issue dates, higher levels of pre-issue short selling are significantly related to larger issue discounts, consistent with manipulative trading. These results are significant only for the non-shelf registered offerings in our sample. We also directly test the effectiveness of SEC Rule 105, and find that it constrains some but not all manipulative trading. This research makes three main contributions to the literature. We are the first paper since the SEC implemented rules restricting such behavior to provide direct evidence that pre-issue short selling is associated with larger SEO discounts. Previous research using monthly short interest data rejects the manipulative trading hypothesis. Our results differ from prior research primarily because daily short selling data allow much more powerful tests. Second, our evidence that there is no manipulation around shelf offerings provides one possible explanation for the increased popularity of shelf registrations. Finally, although short selling usually enhances price efficiency, we document a situation where short selling makes prices less efficient.

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

Download or read book The Debt equity Choice written by Ronald W. Masulis and published by . This book was released on 1988 with total page 168 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Anchoring on Historical High Prices and Seasoned Equity Offerings written by Armen Hovakimian and published by . This book was released on 2019 with total page 51 pages. Available in PDF, EPUB and Kindle. Book excerpt: We document that firms' financing decisions are affected by historical high prices. The ratio of the monthly high price to the 12-month historical high positively affects the probability of an SEO. Furthermore, the announcement market reaction is muted and the offering discount is smaller if the pre-announcement stock price is high relative to historical high. The results suggest that historical high price reference points may help managers rationally time SEOs to take advantage of market reception and minimize issuance costs.

Download or read book The Effect of Investor Attention on the Pricing of Seasoned Equity Offerings written by Cristian A. Pinto-Gutierrez and published by . This book was released on 2015 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: I examine the role of investor attention on seasoned equity offerings' (SEOs) outcomes. I use an archive of Thomson Reuters' news articles and third-party newswires to proxy for investor attention. I find that the volumes of news articles prior to the offerings are positively associated with the offer price discounts of SEOs. Furthermore, the volumes of news articles are negatively associated with the cumulative abnormal returns three days around the SEOs. I conclude that the costs of equity increase with the frequency of news stories prior to SEOs. Overall, the evidence is consistent with the hypothesis that investor attention contributes to the efficiency of the stock market and affects investors' information processing in SEOs.