Download or read book The Impact of Cost of Equity on Seasoned Equity Offerings written by Weiqi Zhang and published by . This book was released on 2014 with total page 53 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper provides an empirical link between the expected cost of equity and firms' Seasoned Equity Offerings activities, using a novel measure of forward-looking cost of equity. There is a negative impact of expected cost equity on SEO likelihood and amount of proceeds, exists on both market and firm level. Empirical evidence suggests that the negative SEO announcement effect and post-SEO long run return is more consistent with the investment opportunity explanation rather than market timing. Firms issuing SEOs when they have high forward-looking cost of equity experience more negative announcement reaction and followed by worse long run post-SEO performance. Consistently, when the cost of equity is higher, firms receive stronger negative reaction during their SEO announcement if they are distressed. These firms are also more likely to pay back their debt one year after the issuance.

Download or read book Seasoned Equity Offerings and Their Impact on the Firm Value written by and published by . This book was released on with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: The literature about capital structure is very dense but this density does not lead to establish a clear relation between capital structure and firm value. The seminal work of Modigliani and Miller (1958) states that under perfect market conditions, the capital structure choices are irrelevant to the firm value. This proposition cannot hold when market frictions are introduced in the analysis. From a theoretical standpoint, two main streams of models can be distinguished. First, trade-off models examine the existence of an optimal repartition between debt and equity. They are based on the hypothesis that the cash flows cannot be fully and symmetrically returned to every investors' type because of bankruptcy costs, corporate and individual taxes and characteristics of the output market (level of competition, production techniques and product specificities). Under these circumstances, firms can gain value in managing their capital structure. The repartition between debt and equity is said to be optimal when it maximises the firm value. However, this relation remains difficult to test empirically. The second theoretical stream is based on the hypothesis that market frictions prevent individual investors and market intermediaries to re-design efficiently and costlessly any financial assets. Therefore, firms have an incentive to issue specific securities to minimise the market imperfections impact on their value. Information asymmetry, agency costs, timing, flotation methods and underwriter's certification become the main determinants of the capital structure choices and they are better suited to explain the impact of these choices on the firm value. Unfortunately, the empirical literature lacks to clearly relate explanatory variables to the theory they should refer to. The dissertation proposes two empirical studies that examine the relation between equity financing and firm value, one at the announcement of the equity offering, the other over a long-term horizon. One c.

Download or read book Seasoned Equity Offerings and Their Impact on the Firm Value written by Pierre Jeanneret and published by . This book was released on 2003 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Price Impacts of Seasoned Equity Offerings in Distinct Market Segments written by Edward Frederic Straube and published by . This book was released on 1987 with total page 90 pages. Available in PDF, EPUB and Kindle. Book excerpt:

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.

Download or read book Analyst Coverage and the Cost of Raising Equity Capital written by Robert M. Bowen and published by . This book was released on 2013 with total page 57 pages. Available in PDF, EPUB and Kindle. Book excerpt: There is limited direct evidence on the impact of analyst coverage on the cost of capital. In this paper, we hypothesize that the amount and nature of analyst coverage can reduce information asymmetry among investors and thus lower the cost of raising equity capital. We investigate the effect of analyst coverage on the underpricing of seasoned equity offerings (SEOs), which is a substantial cost of issuing new shares. Based on 4,766 SEOs in the period 1984-2000, our results suggest that more analyst coverage is associated with lower SEO underpricing. Compared with firms without analyst coverage, firms with the median level of analyst coverage - three analysts - have a 1.19% lower SEO underpricing, a relative decrease of 38%. This effect is robust to controlling for other factors affecting SEO underpricing. We also examine additional attributes of analyst coverage and find that firms followed by analysts working for the lead underwriter, with a reputation for superior ability, or with lower forecast dispersion have incrementally lower SEO underpricing.

Download or read book Seasoned Equity Offerings written by Gemma Lee and published by . This book was released on 2009 with total page 55 pages. Available in PDF, EPUB and Kindle. Book excerpt: Flotation costs represent a significant loss of capital to firms and are positively related to information asymmetry between managers and outside investors. We measure a firm's information asymmetry by its accounting information quality based on two extensions of the Dechow and Dichev earnings accruals model (2002), which is a more direct approach to assessing the information available to outside investors than the more commonly used proxies. Our main hypothesis is that poor accounting information quality raises uncertainty about a firm's financial condition for outside investors, though not necessarily for insiders. This accounting effect lowers demand for a firm's new equity, thereby raising underwriting costs and risk. Using a large sample of seasoned equity offerings, we show that poor accounting information quality is associated with higher flotation costs in terms of (1) larger underwriting fees, (2) larger negative SEO announcement effects, and (3) a higher probability of SEO withdrawals. These results are robust to joint determination of offer size and flotation cost components and to adjustments for sample selection bias.

Download or read book Seasoned Equity Offerings and Their Impact on the Firm Value written by Pierre Jeanneret (économiste.) and published by . This book was released on 2003 with total page 286 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book The Timing and Consequences of Seasoned Equity Offerings written by Amy K. Dittmar and published by . This book was released on 2019 with total page 57 pages. Available in PDF, EPUB and Kindle. Book excerpt: The likelihood of seasoned equity offerings (SEOs) jumps discontinuously when the stock price equals the most recent equity offer price. Anchoring on the last offer price holds after considering executive turnovers, stock splits, earnings management, or dividend adjustments. Using a fuzzy regression discontinuity design around this cutoff, which exploits local randomness in stock prices, we investigate the consequences of anchoring in SEOs. We find significant increases in cash holdings and acquisitions of lower quality, with no real effects on investment or employment. Overall, we provide some of the cleanest estimates, to date, of the timing and causal effects of SEOs.

Download or read book How Economic Policy Uncertainty Affects the Cost of Raising Equity Capital written by Yue-Cheong Chan and published by . This book was released on 2019 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt: Economic policy uncertainty (EPU) increases the cost of raising equity capital, especially when the economy is weak. A one standard deviation increase in the EPU index developed by Baker, Bloom, and Davis (2016) is associated with a 43 basis point increase in the price discount of seasoned equity offerings (SEOs) during the recent 2000-2014 period. The cross-sectional analysis shows that the EPU effect on SEO discounts is stronger for firms with greater dependence on government spending, less informative stock price, or a smaller EPU beta. Moreover, there are fewer SEO activities in periods when there is a high degree of policy uncertainty.

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.

Download or read book Seasoned Equity Offerings written by Edith Ginglinger and published by . This book was released on 2015 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines the impact of market liquidity on seasoned equity offerings (SEO) characteristics in France. We find that, besides blockholders' takeup, liquidity is an important determinant of SEO flotation method choice. We document higher direct equity offering flotation costs, but also improved stock market liquidity after public offerings and standby rights relative to uninsured rights. After controlling for endogeneity in the choice of SEO flotation method, we find that pure public offerings and standby rights are comparable in terms of direct costs and liquidity improvement. Our results provide new insights as to why firms choose public offerings despite apparently higher costs.

Download or read book Essays on the Motives and Costs of Seasoned Equity Offerings written by Ping Sun and published by . This book was released on 2018 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

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 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 Seasoned Equity Offerings written by B. Espen Eckbo and published by . This book was released on 2009 with total page 71 pages. Available in PDF, EPUB and Kindle. Book excerpt: We review the theory and statistical evidence concerning the causes and effects of seasoned public offerings of common stock. We focus in particular on results and findings that post-date the well known survey by Smith (1986). In fact, recent studies now provide at least partial answers to several of the quot;unresolved issues'' listed by Smith at the end of his survey. These include (i) to what extent does the market reaction to issue announcements depend on the flotation method; (ii) the conditions that lead issuers to select uninsured rights or rights with standby underwriting over a firm commitment underwritten offer; (iii) why rights issues continue to be the predominant flotation method in many foreign jurisdictions while they have become virtually extinct in the U.S.; and (iv) the determinants of direct and indirect flotation costs across flotation methods. In addition, we review (v) recent trends in aggregate issue activity; (vi) the timing of individual equity issues; and (vii) market microstructure effects of equity offers.

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