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We provide evidence of stock market performance prior to announcements of the assuance or retirement of securities which is consistent with Myers and Majluf [1984] and Miller and Rock [1985]. Stocks of firms issuing seasoned common equity are significantly over‐valued in the market prior to the issue, but in the year following, decline to their original level. Stocks of firms issuing convertible debt also are over‐valued, but to a lesser degree than that of firms issuing seasoned equity. Stock of firms issuing straight debt appears to be neither over‐valued nor undervalued. The after‐market firm performance, measured by earnings, cash flows or dividends, is consistent with Miller and Rock. We document a decline in after‐market performance for firms issuing convertible or straight debt and an improvement for those repurchasng shares. However, contrary to predictions, we find that firms issuing seasoned equity do not have lower earnings or cash flows in the following year, and increase their rate of dividend payment as well. We document evidence indicating that firms issue equity to maintain or increase dividends. The market anticipates the dividend increase and shows no response to announcements of dividend changes following an equity issue. However, we are unable to explain why the market reacts in such a negative manner to equity issues, when the after‐market performance of the firm is as expected.

The authors compare the post-issue stock and operating performance of rights issue versus public offer firms using Korean data. The authors find that the stock returns of rights issue firms are less negative than those of public offering firms during the three years subsequent to the seasoned equity offering. The authors further find that the profitability of rights offering firms is superior to those of public offering firms and that the ratio of sales to assets for rights issue firms is much higher over the post-issue period. The results substantiate Heinkel and Schwartz’s (1986) and Eckbo and Masulis’ (1992) theoretical models that posit firms with better quality tend to select the rights issue rather than public offer method when issuing seasoned equity.

Using a sample of 6,198 US firms that went public from 1975 to 2004, the purpose of this paper is to examine when these firms come back to the equity market and investigate the determinants of the timing decision.

By properly modeling the time between two consecutive equity offerings using the duration analysis, the author tests different hypotheses in a unified framework and investigates their relative importance in explaining the timing decision of seasoned equity issuance.

The paper documents that firms often return for a new round of equity issuance shortly after the preceding one. First seasoned equity offerings (SEOs) after the IPO are more likely to be conducted at a faster speed than subsequent (follow-on) SEOs. The duration analysis shows that first SEOs are more likely to ride the aggregate stock market wave and take advantage of the idiosyncratic mispricing of the stock than follow-on SEOs. On the contrary, both macroeconomic and firm-specific growth opportunities are more important for follow-on SEOs than for first SEOs.

The paper employs a novel econometric method to depict a dynamic picture of SEO decisions. The results provide a possible explanation to reconcile the discrepancies in the findings of prior studies. Namely, those studies examining mostly first SEOs could bias toward the timing hypothesis, while those studies focussing on follow-on SEOs is more likely to find evidence that supports the need for growth.

The purpose of this paper is to contribute to the literature on seasoned equity offerings (SEOs) by examining the underpricing of European real estate corporations and identifying determinants explaining the phenomenon of setting the offer price at a discount at SEOs.

With a sample of 470 SEOs of European real estate investment trusts (REITs) and real estate operating companies (REOCs) from 2004 to 2018, multivariate regression models are applied to test for theories on the pricing of SEOs. This paper furthermore tests for differences in underpricing for REITs and REOCs as well as specialized and diversified property companies.

Significant underpricing of 3.06 percent is found, with REITs (1.90 percent) being statistically less underpriced than REOCs (5.08 percent). The findings support the market timing theory by showing that managers trying to time the equity market gain from lower underpricing. Furthermore, underwritten offerings are more underpriced to reduce the risk of the arranging bank, but top-tier underwriters are able to reduce offer price discounts by being more successful in attracting investors. The results cannot support the value uncertainty hypothesis, but they are in line with placement cost stories. In addition, specialized property companies are subject to lower underpricing.

An optimal issuance strategy taking into account timing, relative offer size and the choice of the underwriter can minimize the amount of “money left on the table” and therefore contribute to the lower cost of raising capital.

This is the first study to investigate SEO underpricing for European real estate corporations, pricing differences of REITs and REOCs in seasoned offerings and the effect of market timing on the pricing of SEOs.

The purpose of this paper is to examine the impact of earnings smoothing on the underpricing of seasoned equity offerings (SEOs). It aims to investigate whether earnings smoothing can add value to firms by reducing the degree of SEO underpricing.

The sample of US common stock seasoned equity offerings (SEOs) by non‐regulated firms during 1989‐2009 was used to conduct various cross‐section, univariate, and multivariate tests, using several proxies for earnings smoothing, in order to confirm the impact of earnings smoothing on the degree of SEO underpricing. Three‐stage least square estimation was used to address the possible endogeneity of pricing and earnings smoothing.

Smooth earnings performance resulting from discretionary accruals is negatively related to SEO underpricing and improves earnings informativeness. Consistent with risk management and signaling theories, managers' efforts to produce smooth earning reports may add value to their firms. Based on the mean values for SEOs, such smoothing reduces underpricing by $0.33 per share offered and increases the value of the average offering by $1.65 million. Smoothed earnings also conveys information about the firms' future performance, as firms with a long historical pattern of smooth earnings prior to SEOs significantly outperform, for at least three years after the SEO, those with more volatile earnings, with respect to stock returns and operating performance.

The paper contributes specifically to the current literature on earnings smoothing by demonstrating that high quality firms that expect larger quantity of cash flows in the near future are more likely to actively smooth earnings via discretionary accruals before SEOs to reduce underpricing. The paper contributes generally by showing that firms can signal their quality to outside investors by showing smooth earnings over a long period of time and such firms are more likely to experience a lower degree of underpricing through SEO episodes.

Short‐term cash need plays a critical role in equity issuance decisions. Consequently, the ease with which a seasoned equity offer (SEO) is completed can have a direct effect on the cost of raising equity. The purpose of this paper is to examine whether liquidity is likely to affect the ease with which an offer is completed, as proxied by the length of the offer.

This study uses multiple regression analysis to establish the link between liquidity and the duration of the SEO completion cycle. To provide support to the findings, event study methodology is employed to study the abnormal volume turnover during the pre‐SEO announcement period for firms with shorter and longer registration periods.

The paper finds that firms with greater liquidity come to market sooner. The results indicate a small yet significant effect of liquidity on the duration of the SEO completion cycle. There is also evidence that lower pre‐announcement period volume turnover is associated with a longer registration period – which has some implications for issuance costs. The results are robust to the inclusion of industry or firm effects, use of different regression specifications, and application of alternative liquidity measures.

This paper belongs to the growing literature that examines the link between liquidity and the firm's equity issuance costs. It adds to the literature by: examining the determinants of the time it takes to complete an offering; providing the evidence that liquidity may affect the ease with which investment bankers place new shares; and presenting the evidence using newer measures of liquidity based on low‐frequency data.

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.

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.

Since the initiation of the share split reform by the Chinese Securities Regulatory Commission (CSRC) in 2005, the private placement has become the major source of raising equity after IPO. The purpose of this paper is to investigate why listed firms in China prefer private placements compared to other options of raising capital.

The ordinary least squares regression, the piecewise regression and the cross‐sectional regression analysis were undertaken to investigate the determinants and characteristics of the seasoned‐equity offerings announcement effects. Probit regression analysis was taken to estimate the probability of a firm choosing private placements.

The authors find positive significant announcement abnormal returns for private placement. The findings also indicate that operating performance deteriorates immediately after announcement and poor operating performance is more likely to be contributed by large size portfolios, which suggests size effect.

The paper's evidence contributes to an understanding of the wider implication of the share split reform undertaken by the CSRC.

The paper provides insights for policy makers in China and around the world who have and wish to adopt similar practices within their jurisdictions. Similar research can be conducted in other emerging markets to enable better understanding and implications of seasoned equity offerings on firm financial performance.

The paper is novel in regard to the data and the wider research paradigm used.

A significant number of Chinese companies are listed overseas. The authors aim to examine whether overseas locations affect their financing decision, specifically their capital structure choice.

Most of the Chinese overseas listed companies are listed in the USA and Hong Kong. As the institutional quality of the USA is better than Hong Kong, the authors, therefore, choose to build the hypotheses from the “law and finance” literature. Specifically, the authors argue that the better institutional environment of the USA can mitigate the information asymmetry problem and the agency problem of financing via equity. Consequently, firms listed in the USA will rely more on equity and have lower leverage ratio. The difference in leverage ratio of US listed and Hong Kong listed companies should be larger when the marginal benefit of better information environment is larger.

Referring to various data sources, the authors construct a comprehensive list of overseas listed companies in the USA and Hong Kong. The authors collect the accounting and stock performance information from Datastream/Worldscope and the equity offering data from Global New Issue database. The empirical findings provide strong support of the hypotheses: the leverage is 15 percent lower for US listed companies than the Hong Kong listed companies; the results are stronger when the firms face more severe information asymmetry problem; the stock price reacts less negatively for seasoned equity offering in the USA than in Hong Kong.

Most of the Chinese companies decided to be listed overseas because they cannot be listed in the Mainland Chinese stock exchanges. One of the most important motivation is to access to external capital to support firm growth. As the main channel of external financing in the overseas markets is equity since debt is still mainly domestically based, one implication of this paper is that Chinese companies can gain better access to external capital in the USA than in Hong Kong and relax their financial constraint.

There are a considerable number of Chinese companies listed in the overseas markets. Many successful and famous companies are among them. However, almost no research has been done based on them. This paper documents some very important phenomenon of this market. The authors wish that more studies will be conducted. In addition, the study also complements the existing studies on how institutional environment affects corporate financial behavior.

This paper aims to investigate whether completed vs withdrawn equity offerings result in different stock price performance prior to announcement and between announcement and withdrawal or completion.

Investigates stock price performance prior to equity offerings announcements and between the announcement and actual completion or withdrawal. Stock price performance is measured by cumulative abnormal returns (CARs).

It was found that stock price performance is strong only for firms that later complete the offerings. Firms that withdraw their offerings have poor stock price performance even before the announcement. Additionally, it was found that stock price performance for both the completed and the withdrawn offerings is poor after the announcement. Contrasting with prior research, the results show that firms complete their equity offerings, even though their stock price performance deteriorates. The fact that this deterioration is significantly smaller (approximately one‐third) than that of withdrawn offerings indicates that there is an acceptable level of deterioration that firms tolerate.

The paper evaluates short‐run stock price performance for a number of firms in the period 1984‐2000.