Forecasting the use of seasoned equity offerings

Abstract

Seasoned equity offerings (SEOs) are sales of stock after the initial public offering. They are a means to raise funds through the sale of stock rather than the issuance of additional debt. We propose a method to predict the characteristics of firms that undertake this form of financing. Our procedure is based on logistic regression where firm-specific variables are obtained from the perspective of the firm's need to raise cash such as high debt ratios, high current liabilities, reduction and changes in current debt, significant increase in capital expenditure, and cash flows in terms of cash as a percentage of assets.

Citation

Abraham, R. and Harrington, C. (2010), "Forecasting the use of seasoned equity offerings", Lawrence, K.D. and Klimberg, R.K. (Ed.) Advances in Business and Management Forecasting (Advances in Business and Management Forecasting, Vol. 7), Emerald Group Publishing Limited, Leeds, pp. 23-36. https://doi.org/10.1108/S1477-4070(2010)0000007005