Day‐of‐the‐week effect in the seasoned equity offering discount

Abstract

Purpose

The purpose of this paper is to examine whether or not a calendar time anomaly exists in the number and discount of seasoned equity offerings (SEOs) from 1980‐2004.

Design/methodology/approach

Regression analysis was used on data from SEOs offered from 1980 to 2004 to determine the significance of the SEO discount over days‐of‐the‐week and the significance of factors relating to SEOs offered on a Monday. The characteristics of Monday SEOs were compared to those offered on other days of the week.

Findings

Monday has the fewest number of SEOs with a statistically significant larger offer price discount, on average, than issues done on other days of the week. This has been attributed to the Monday effect, in part to the implementation of Rule 10b‐21, which led to reduced short‐selling pressure and reduced the uncertainty associated with the weekend effect on the part of the issuing firm.

Originality/value

This paper adds value to the finance literature in that it extends the research on calendar‐time anomalies in financial markets. It also adds to the existing research on SEOs and notes characteristics in this particular section of the markets that may be important to both issuers and investors.

Citation

Jones, T.L., Fu, X. and Tang, T. (2009), "Day‐of‐the‐week effect in the seasoned equity offering discount", Managerial Finance, Vol. 35 No. 1, pp. 48-62. https://doi.org/10.1108/03074350910922582