Long-Run Underperformance on Seasoned Equity Offerings: An Evidence from Indonesia

Abstract

The research aimed to analyze the underperformance phenomenon following Seasoned Equity Offering (SEO)in Indonesian context. Samples were all firms listed on the Indonesia Stock Exchange with the right issue in the observed periods, were chosen by purposive sampling with several criteria. In total, there were 109 issuing firms from 2009-2014 that were analyzed using performance benchmarking approaches. The approaches consisted of market-based, size-based, growth-based, and industry-based benchmarks. The market-based was constructed using a market return. Then, the size and the growth benchmarks were constructed on the basis of closest market capitalization and closest price-to-book value respectively. Then, the industry benchmark was based on a closest combined of market capitalization and Price to Book Value (PBV) of matched firms within the first-second digit of Standard Industry Classification (SIC). The test was conducted using standard t and Wilcoxon tests by examining the benchmark-based abnormal returns over various spans ranging from 3 to 36 months following the right offerings. Like several findings in developed countries, the results also confirm the underperformance phenomenon following right offerings in Indonesia. The negative abnormal returns are found for all benchmark performances, but they are only significant for the market benchmark and partially significant for the size and the growth benchmarks. Behavioral explanations need to be modeled to reveal the intuitions behind the results.

The Intra-Industry Spillovers of Indonesian Right Offerings

“…Therefore, it may be better to approach the issue of information spillovers following right offerings with a longer time horizon. This is so considering that Rafik and Azmi (2019) have succeeded in proving the underperformance of issuing firms in the long term, of up to three years post-right issues.…”

“…In Indonesia, the studies regarding information spillovers of right offerings are still rarely addressed. The existing studies of Indonesian right offering so far mainly investigate both the short and the long-term market reactions to the issuers' performance (Catranti, 2009;Susanti and Ardiana, 2014;Kamalsah and Panjaitan, 2015;Bahri, 2018, Rafik andAzmi, 2019). Norhamida (2006) and Saputra (2015) are some of the researchers who have tried to prove the existence of intra-industry spillovers of right issues in Indonesia.…”

Variações de Preços no Mercado Imobiliário de Manaus e a Formação de Bolhas Especulativas

“…Fama e French (1996) Mostraram que o modelo de três fatores proposto não era capaz nem ao menos de explicar os retornos médios de carteiras classificadas por tamanho e valor contábil/valor de mercado, as dimensões de retorno médio as quais o modelo foi desenvolvido para capturar. Fama (1998) Conclui que o problema de má especificação do modelo não pode ser evitado Lougharam e Ritter (1995), Brav e Gompers (1997) e Brav et al (1995) Os retornos anormais de estratégias de comprar-e-segurar de longo prazo de ações ipos e seos apresentam retornos inferiores anormais. Asquith (1983, Agrawal et al (1992 Cusatis et al (1993) Demonstraram que após o fato de desmembramento de empresa faziam com que estas, tanto a desmembrada como a controladora apresentavam retornos positivos anormais em um período de três anos após o evento.…”