We investigate three issues about the impact of insider trades and institutional holdings on seasoned equity offerings (SEOs). First, we test how insider trades affect the trading behavior of institutional investors in SEOs. Second, we test whose trading behavior, either insiders or institutional investors, has greater explanatory power for the performance of SEO firms after issuing new stocks. Third, we analyze the industry-wide spillover effects of insider trades and institutional holdings. Empirically, we find that insiders and institutional investors of SEO firms may utilize similar information in their transactions because insider trades induce similar trading behavior for institutional investors. In addition, insider trades, relative to institutional holdings, have greater explanatory power for SEO firm’s long-term performance. Finally, compared with insider trades, institutional holdings have a more significant spillover effect in the industry of SEO firms.

Purpose The purpose of this paper is to investigate that how firms’ pre-issue investment levels and changes in institutional ownership (IO) affect their long-run performance after seasoned equity offerings (SEOs). Design/methodology/approach The authors use Richardson’s (2006) method to measure firms’ pre-issue investment levels and then divide the SEO firms into the under-, normal-, and overinvesting groups. The study examines the relation between the pre-issue abnormal investment and long-run post-issue performance. In addition, the authors examine whether changes in IO around SEOs affects SEO firms’ performance. Findings The authors find a quadratic relation between the pre-issue abnormal investment and the long-run post-issue performance. In other words, the underinvesting and overinvesting groups tend to underperform. The authors also find that changes in IO around SEOs positively associate with firms’ long-run performance. Research limitations/implications The authors ascribe the underperformance of underinvesting firms to the deficiency of good growth opportunities; for overinvesting firms, the authors link to the misalignment problem of managerial incentive (i.e. empire building). Originality/value The results suggest that long-run investors should be cautious of buying new-issue shares of underinvesting and overinvesting firms, especially those with insignificant increases in IO.

We analyze the information advantage of insiders and institutional investors from the efficiency of internal capital market defined in Billett and Mauer [1]. The empirical evidence shows three major findings in this paper. First, the inefficient subsidies to constrained firms have significantly negative impact on the firm's long-term performance. In addition, the diversified firms with transfer segments, both efficient and inefficient transfer, have significantly positive effect on the firm's performance. Second, the insiders and institutional investors of diversified firms may use similar information regarding the internal capital market because they show the similar trading behavior with respect to efficient subsidies to both constrained and non-constrained segments. Finally, the insiders play a more important role in the firms' long-term performance. In sum, we conclude that both institutional investors and insiders have some information advantage of internal capital market. Insiders, however, have stronger impact on the diversified firms' long-term performance.

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This study explores online insurance ventures by customers' behavioral profiles from data mining and visualization. First, we employ a simple decision-tree statistical learning method on unique hand-collected and processed data in Taiwan. This method considers first-time online insurance subscribers as new ones without a proper marketing connection after six months. Second, using advanced clustering technique and decision tree statistical learning on first-time purchasing customers, we find they repurchase online travel insurance for different purposes varying periods. Finally, we get robust results engaging different segmentations of customer data. In these ways, we enable marketing strategies to work with generating decision rules.

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We investigate three issues about the impact of insider trades and institutional holdings on mergers and acquisitions (M&As). First, we test how insider trades affect the trading behavior of institutional investors in M&As. Second, we test whose trading behavior, either insiders or institutional investors, has greater explanatory power for the performance of M&A firms after takeover announcements. Third, we analyze the industry-wide spillover effects of insider trades and institutional holdings. Empirically, we find that insiders and institutional investors of M&A firms may utilize similar information in their transactions because insider trades induce similar trading behavior for institutional investors. In addition, insider trades, relative to institutional holdings, have greater explanatory power for M&A firm's long-term performance. Finally, compared with insider trades, institutional holdings have a more significant spillover effect in the industry of M&A firms.

We test the relationship between the implied cost of capital and two agency problems, free cash flows and overinvestment. We show that free cash flows have a significant negative impact on the implied cost of capital, but overinvestment has a significantly positive impact. In addition, the pay-for-performance sensitivity has a negative effect but the sensitivity of volatility has a significantly positive effect on the implied cost of capital. After taking the incentives into account, we find that the significance of the impact from both agency problems still exists. Finally, we conclude that well-designed executive compensation should focus on reducing overinvestment and the sensitivity of volatility.