The rise of UK Seasoned Equity Offerings (SEOs) fees during the financial crisis: The role of institutional shareholders and underwriters

2014 ◽  
Vol 48 ◽  
pp. 13-28 ◽  
Author(s):  
Mario Levis ◽  
Michele Meoli ◽  
Katrin Migliorati
Keyword(s):  
Financial Crisis ◽  
Seasoned Equity Offerings ◽  
Equity Offerings ◽  
Institutional Shareholders

The Role of Accounting Conservatism in the Equity Market: Evidence from Seasoned Equity Offerings

2013 ◽  
Vol 88 (4) ◽  
pp. 1327-1356 ◽  
Author(s):  
Yongtae Kim ◽  
Siqi Li ◽  
Carrie Pan ◽  
Luo Zuo
Keyword(s):  
Negative Impact ◽  
Seasoned Equity Offerings ◽  
Equity Market ◽  
Accounting Conservatism ◽  
Data Availability ◽  
Equity Offerings ◽  
Market Reactions ◽  
Conservative Accounting ◽  
Financing Costs

ABSTRACT Using seasoned equity offerings (SEOs) from 1989 to 2008, we examine the role of accounting conservatism in the equity market. We find that issuers with a greater degree of conservatism experience fewer negative market reactions to SEO announcements. We further show that an important mechanism through which conservatism affects SEO announcement returns is by mitigating the negative impact of information asymmetry. Additional analyses suggest that our results are not driven by the effects of other forms of corporate governance. We also find evidence that conservative issuers continue to use conservative accounting after the equity offerings. Taken together, our findings are consistent with the argument that accounting conservatism reduces financing costs in SEOs. Data Availability: Data used in this study are available from public sources identified in the study.

The Role of Internal Control in the Equity Issue Market: Evidence From Seasoned Equity Offerings

2015 ◽  
Vol 32 (3) ◽  
pp. 303-328 ◽  
Author(s):  
Xinghua Gao ◽  
Yonghong Jia
Keyword(s):  
Internal Control ◽  
Risk Premium ◽  
Dominant Role ◽  
Seasoned Equity Offerings ◽  
Equity Capital ◽  
Equity Offerings ◽  
Equity Issue ◽  
Sarbanes Oxley ◽  
The Cost

This article examines the role of internal control requirements under the Sarbanes–Oxley (SOX) Act of 2002 in firms’ cost of raising equity capital. We find that, prior to the disclosure of internal control weaknesses (ICWs), ICWs are not directly associated with underwriters’ gross spread and seasoned equity offering (SEO) underpricing. After the disclosure, however, underwriters charge a risk premium on ICW issuers, especially on those disclosing ICWs in multiple consecutive years. We also find that SEO underpricing is exacerbated by multiple-year-disclosed ICWs but not by first-timers. More notably, we find that managers play a dominant role in deciding issue size pre-disclosure, but this dominance weakens post-disclosure. Taken together, our evidence suggests that internal controls help moderate the cost of raising equity capital and that ICW disclosures have significant implications for underwriters in the equity issue market.

The Underpricing of Initial Public Offerings and Private Placements of Equity in China

2018 ◽  
pp. 572-591
Author(s):  
Gang Nathan Dong ◽  
Ming Gu
Keyword(s):  
Initial Public Offerings ◽  
Seasoned Equity Offerings ◽  
Equity Offerings ◽  
Publicly Traded ◽  
Ipo Underpricing ◽  
Public Offerings ◽  
Private Placements ◽  
Strategic Role ◽  
International Setting

While the costs borne by firms in raising external capital through initial public offerings (IPOs) and seasoned equity offerings are well documented, the strategic role of IPO underpricing in the market for raising equity after the IPO remains largely unstudied, particularly in an international setting. In China publicly traded firms often issue post-IPO equity through private placements of equity (PEPs), rather than public offerings. This chapter examines the relationship between the pricing behavior of IPOs and the issuance choice of future PEPs. Do companies use IPO underpricing as a strategic precursor toward raising additional capital in future PEPs? If the success of initial offerings of equity can help improve the capital-raising capacity and reduce the issuance cost in subsequent offerings, high-quality firms will intentionally pursue a multiple-issue strategy by lowering the IPO offer price in order to raise more capital at a higher price in PEPs.

Auditor Changes and the Pricing of Seasoned Equity Offers

2006 ◽  
Vol 20 (4) ◽  
pp. 333-349 ◽  
Author(s):  
Yongtae Kim ◽  
Myung Seok Park
Keyword(s):  
Initial Public Offerings ◽  
Positive Association ◽  
Seasoned Equity Offerings ◽  
Shopping Behavior ◽  
Equity Offerings ◽  
Public Offerings ◽  
Opinion Shopping ◽  
Practical Standpoint ◽  
Prior Literature

While prior literature examines the role of auditors in the pricing of initial public offerings, little is known about the effect of auditor changes on the pricing of seasoned offers. Our examination of seasoned equity offerings shows that companies switching auditors prior to the offerings underprice their offers more than do companies without changes. While we provide evidence of issuers' opportunistic accounting decisions that are consistent with their opinion-shopping behavior, the positive association between underpricing and auditor changes suggests that switchers bear a net cost compared to non-switchers. From a practical standpoint, our findings alert a company considering a change of its auditor prior to a new equity issue.

Sign in / Sign up

Export Citation Format

Share Document