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 Seasoned Equity Offers written by Vincent Intintoli and published by . This book was released on 2011 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt: SEO underpricing has increased dramatically since the early 1980s. While previous research has examined the determinants of SEO underpricing, these studies have not explored the effect of insider ownership on discounts. We find that this effect is twofold. First, higher insider ownership reduces float, thereby increasing price pressure and SEO underpricing; this effect is greatest in firms with low liquidity. Second, the greater the percentage of secondary shares offered, the lower the underpricing, suggesting that managers pressure banks to reduce underpricing when their personal wealth is at stake. However, we find that this negative relation is mitigated if the firm employs a prestigious underwriter.
Download or read book Pricing of Seasoned Equity Offers and Earnings Management written by Yongtae Kim and published by . This book was released on 2006 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This study examines the relationship between earnings management by firms offering seasoned equity issues and the pricing of their offers. We hypothesize that seasoned equity offering (SEO) firms employing aggressive accounting decisions also more aggressively push up their offer prices, thereby leading to a decrease in the degree of underpricing. Consistent with our prediction (the issuer's greed hypothesis), evidence indicates that SEO firms making opportunistic accounting decisions issue new shares at inflated prices. Our findings remain robust after controlling for other determinants of SEO underpricing and the possible endogeneity of pricing and earnings management.
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 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 Underpricing of Seasoned Equity Offerings by Canadian Cross Listed Firms in the Pre and Post Sarbanes Oxley Periods written by Arturo Rubalcava and published by . This book was released on 2016 with total page 12 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines the impact of the Sarbanes-Oxley Act of 2002 on underpricing of seasoned equity offerings by Canadian cross-listed firms and its determinants. It finds underpricing is not significantly different between the pre- and post-Sarbanes-Oxley periods. When distinguishing underpricing by two methods of choice for underwriting seasoned equity offerings -bought deals vs. firm commitment-, underpricing is higher for firm commitment than for bought deals during the overall period 1995-2008 and the post-Sarbanes period, after controlling for offer and firm characteristics. In addition, underpricing of bought deals and firm commitment are subject to different determinants for the pre- and post-Sarbanes periods, respectively. The main reason underpricing is high on firm commitment, after the passage of the Act, is for global offers. This suggests issuing equity globally has been unfavorable for firm commitment after the passage of the Act.
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 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 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 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 The Marketing of Seasoned Equity Offerings written by Xiaohui Gao and published by . This book was released on 2008 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: ABSTRACT: Accelerated seasoned equity offerings (SEOs), which include bought deals and accelerated bookbuilt offers, have increased dramatically in the U.S. and globally recently. Accelerated offers are cheaper than traditional fully marketed offers in terms of direct issue costs. To explain why some issuing firms choose a fully marketed offer instead of an accelerated offer, we develop a model in which marketing flattens the issuer's demand curve. Empirical analysis shows that the pre-issue elasticity of the issuing firm's demand curve and the relative offer size are important determinants of the offer method. In our analysis, the elasticity of demand at the time of issuance is endogenous.
Download or read book Corporate Capital Structures in the United States written by Benjamin M. Friedman and published by University of Chicago Press. This book was released on 2009-05-15 with total page 404 pages. Available in PDF, EPUB and Kindle. Book excerpt: The research reported in this volume represents the second stage of a wide-ranging National Bureau of Economic Research effort to investigate "The Changing Role of Debt and Equity in Financing U.S. Capital Formation." The first group of studies sponsored under this project, which have been published individually and summarized in a 1982 volume bearing the same title (Friedman 1982), addressed several key issues relevant to corporate sector behavior along with such other aspects of the evolving financial underpinnings of U.S. capital formation as household saving incentives, international capital flows, and government debt management. In the project's second series of studies, presented at the National Bureau of Economic Research conference in January 1983 and published here for the first time along with commentaries from that conference, the central focus is the financial side of capital formation undertaken by the U.S. corporate business sector. At the same time, because corporations' securities must be held, a parallel focus is on the behavior of the markets that price these claims.
Download or read book Handbook of Empirical Corporate Finance SET written by Bjørn Espen Eckbo and published by Elsevier. This book was released on 2008-12-23 with total page 1137 pages. Available in PDF, EPUB and Kindle. Book excerpt: This two-volume set summarizes recent research on corporate decision-making. The first volume covers measurement and theoretical subjects as well as sources of capital, including banks, public offerings, and private investors. In the second volume, contributors focus on the ways corporations are structured and the practices through which they can be bought and sold. Thus, its major subjects include dividends, capital structure, financial distress, takeovers, restructurings, and managerial incentives. Takes stock of the main empirical findings to date across an unprecedented spectrum of corporate finance issues Discusses everything from econometric methodology, to raising capital and capital structure choice, and to managerial incentives and corporate investment behavior Contributors are leading empirical researchers that remain active in their respective areas of expertise Writing style makes the chapters accessible to industry practitioners
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 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 Oxford Handbook of IPOs written by Douglas Cumming and published by . This book was released on 2018 with total page 841 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book provides a comprehensive analysis of IPOs. The chapters cover the latest information on a range of fundamental questions, including: How are IPOs regulated? How are IPOs valued? How well does an IPO perform in the short and long run, and what are the drivers of performance?
Download or read book Handbook of the Economics of Finance written by George M. Constantinides and published by Elsevier. This book was released on 2003-11-04 with total page 654 pages. Available in PDF, EPUB and Kindle. Book excerpt: Volume 1A covers corporate finance: how businesses allocate capital - the capital budgeting decision - and how they obtain capital - the financing decision. Though managers play no independent role in the work of Miller and Modigliani, major contributions in finance since then have shown that managers maximize their own objectives. To understand the firm's decisions, it is therefore necessary to understand the forces that lead managers to maximize the wealth of shareholders.
