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Seasoned equity offerings and corporate governance in Europe

Christian Happ (Department of Business, Economics, and Law, Technische Universitat Darmstadt, Darmstadt, Germany)
Dirk Schiereck (Department of Business, Economics, and Law, Technische Universitat Darmstadt, Darmstadt, Germany and Real Estate Management Institute of EBS Business School, Wiesbaden, Germany)

Journal of European Real Estate Research

ISSN: 1753-9269

Article publication date: 7 August 2017



This paper aims to analyze the effects on shareholder value caused by the announcement of seasoned equity offerings (SEOs) by real estate firms from 12 European countries.


A 4-factor model event study is conducted to assess the impact of SEO announcements on firm value. Additionally, a cross-sectional regression is run to identify factors that aggravate or mitigate the documented announcement effects.


Significant wealth losses of −1 per cent are found on the announcement day of an SEO. However, firms with good corporate governance and a low probability of overinvesting experience less negative announcement effects.

Research limitations/implications

The present study considers equity financing. In this context, investors seem to thoroughly assess the implications of capital increases by looking at quality indicators. For firms with good corporate governance, management incentivizing mechanisms and a lower probability of overinvesting, shareholders’ trust in the management mitigates the bad signal that the announcement of an SEO usually conveys.


The finding of corporate governance as a value enhancing factor in the context of equity offerings, even during periods of financial turmoil, is reassuring to both managers and regulators.



The authors thank the Editor Stanley McGreal and two anonymous reviewers for helpful comments and assistance. Moreover, the authors are grateful for research funding from the TAG Center for Real Estate Asset Management at the Technische Universität Darmstadt, Germany.


Happ, C. and Schiereck, D. (2017), "Seasoned equity offerings and corporate governance in Europe", Journal of European Real Estate Research, Vol. 10 No. 2, pp. 170-194.



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