The Marketing of Seasoned Equity Offerings

Abstract

Kong for helpful comments and suggestions. Xiaohui Gao gratefully acknowledge the research support from the Faculty of Business and Economics at the University of Hong Kong and the Research Grants Council of the Hong Kong SAR government. Special thanks to Xiaoding Liu for research assistance.

Stock repurchases and treasury share sales: Do they stabilize price and enhance liquidity?

“…14 According to several recent estimates, average underwriter gross spreads for shelf registrations range from 3.88% (Bethel and Krigman, 2008) to 3.99% (Autore et al, 2008; this figure also includes other direct costs like legal fees paid by the issuer). There are also sizable indirect costs of selling stock through shelf registrations given that announcements of shelf registrations and of actual stock issues attract significant negative reactions by investors (see, for example, Bethel and Krigman, 2008;Gao and Ritter, 2010). 15 Based on information available on the website of the Italian Stock Exchange, we estimate that over the period 1997-2004 the average fraction of Italian shares that are obliged to have a designated market maker is 14.93%.…”

Does Accounting Conservatism Reduce Overpricing Caused by Short‐Sales Constraints?

“…We then form three SSC portfolios: SSC = 2 (highest) for firms with the highest short interest and the lowest institutional ownership, SSC = 0 (lowest) for firms with the lowest short interest and the highest institutional ownership, and SSC = 1 for all other firms SI Short interest scaled by shares outstanding in the month prior to portfolio formation SIZE Market capitalization, calculated at the end of the month prior to portfolio formation TURN Average number of shares traded over the 100 trading days ending one month prior to the portfolio formation month, divided by shares outstanding on the last day. Following Gao and Ritter (2010), we adjust turnover for NASDAQ firms as follows:…”

Do investors value SEO lockup agreements?

“…Ten-years from IPO is a composite dummy equal to one if the SEO occurs 10 years or more after the IPO. Bortolotti, Megginson and Smart (2008) and Gao and Ritter (2010) show the rapid increase in accelerated offerings. Accelerated SEO, a dummy defined as one if the number of days from announcement to issuance is three days or less, is therefore included.…”