Windows of opportunity and seasoned equity offerings: An empirical study

Kumar, Krishna R.; Hawaldar, Iqbal Thonse; Mallikarjunappa, T.

doi:10.1080/23322039.2018.1528688

Cited by 5 publications

(3 citation statements)

References 36 publications

(58 reference statements)

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“…The impact of the selection of stock offerings is economically significant. Companies with high levels of undervaluation and negative net income tend to choose private placements (Kumar et al, 2018;Andriosopoulos and Panetsidou, 2021)…”

Section: Empirical Evidencementioning

confidence: 99%

What Information Implied in the Equity Offering Mechanism with Market Timing Considerations?

Dewi¹,

M.S.M.²

2023

IJEBA

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Purpose: This research looks at how the choice of share offering mechanism between public offering, rights issue, and private placement implies certain information about the condition of the issuing company. Design/Methodology/Approach: Issuance of shares through market timing considerations clarifies essential information. Not much available literature focuses on SEO mechanisms that have an adverse market reaction. The gap in this study is about the relationship between the motivations behind selecting the share issuance mechanism. Findings: One of the results of this study found that companies that offer a large number of shares when overvalued choose to use the rights issue mechanism because they print higher abnormal returns than other mechanisms. These findings indicate that the bidding mechanism and issuance motivation reflect favourable information about the company's prospects from the offer. The allocation of profits from the transaction reflects future corporate policy information. Further empirical evidence states that companies that choose private placements with market timing considerations face a more severe problem of asymmetric information than companies that choose other mechanisms. Practical Implications: Thus, investors can obtain information about the company's conditions, plans and prospects before investing. This study uses data specific to information asymmetry and market timing on stock offering transactions in Indonesia to represent emerging markets for the 2000-2020 period.

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Section: Empirical Evidencementioning

confidence: 99%

What Information Implied in the Equity Offering Mechanism with Market Timing Considerations?

Dewi¹,

M.S.M.²

2023

IJEBA

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“…Underpricing happens when the offer price of allocated shares is much lower than the offer day price (Lorenz, 2019). This may be due to timing (Naveen Kumar et al. , 2018; Ngo et al.…”

Section: Introductionmentioning

confidence: 99%

Are secondary equity offerings of Black Economic Empowerment (BEE) REITs less underpriced than non-BEE REITs?

Ajayi

Akinsomi²

2022

JPIF

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PurposeThe purpose of this paper is to contribute to the literature on secondary equity offerings (SEOs) by examining the impact of the Black Economic Empowerment (BEE) policy on secondary equity offering (SEO) pricing dynamics of South African Real Estate Investment Trusts (REITs).Design/methodology/approachWith a sample of 152 SEOs of South African REITs from 2010 to 2020, ordinary least squares (OLS) models, fixed effect models, parametric and non-parametric tests were applied to test for the impact of BEE on the underpricing of SEOs.FindingsSignificant underpricing is discovered in highly compliant (BEE) REITs; in other words, SEOs pricing of BEE compliant REITs are more underpriced compared to non-compliant BEE REITs. With this, BEE compliant REITs and more so, highly compliant BEE REITs in particular leave more money on the table.Practical implicationsThe government is therefore aware of the impact policy interventions play when REITs raise financing through SEOS. With these, highly compliant BEE REITs will need to be more strategic when making BEE compliance decisions as this is shown in our study to impact the underpricing of SEOs.Originality/valueThis is the first study to investigate SEO underpricing for the BEE policy using the South African REITs context.

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“…This model has been more often used to know the cost of equity capital. The model strongly believes in a direct relationship between beta and stock return based on market returns (Kumar et al, 2018;Bolar et al, 2017). The theory states that beta is always proportional to gain an extra premium in a given market.…”

Section: Introductionmentioning

confidence: 99%

Rolling regression technique and cross-sectional regression: A tool to analyze Capital Asset Pricing Model

Shetty¹,

Dsouza²,

Hawaldar

2021

Investment Management and Financial Innovations

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The Capital Asset Pricing Model (henceforth, CAPM) is considered an extensively used technique to approximate asset pricing in the field of finance. The CAPM holds the power to explicate stock movements by means of its sole factor that is beta co-efficient. This study focuses on the application of rolling regression and cross-sectional regression techniques on Indian BSE 30 stocks. The study examines the risk-return analysis by using this modern technique. The applicability of these techniques is being viewed in changing business environments. These techniques help to find the effect of selected variables on average stock returns. A rolling regression study rolls the data for changing the windows for every 3-month period for three years. The study modifies the model with and without intercept values. This has been applied to the monthly prices of 30 BSE stocks. The study period is from January 2009 to December 2018. The study revealed that beta is a good predictor for analyzing stock returns, but not the intercept values in the developed model. On the other hand, applying cross-section regression accepts the null hypothesis. α, β, β2 ≠ 0. Therefore, a researcher is faced with the task of finding limitations of each methodology and bringing the best output in the model.

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Windows of opportunity and seasoned equity offerings: An empirical study

Cited by 5 publications

References 36 publications

What Information Implied in the Equity Offering Mechanism with Market Timing Considerations?

What Information Implied in the Equity Offering Mechanism with Market Timing Considerations?

Are secondary equity offerings of Black Economic Empowerment (BEE) REITs less underpriced than non-BEE REITs?

Rolling regression technique and cross-sectional regression: A tool to analyze Capital Asset Pricing Model

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