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    Rights statement: This is a pre-print of an article published in European Financial Management 19 (5), 2013. (c) Wiley-Blackwell

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Managers’ private information, investor underreaction and long-run SEO performance

Research output: Contribution to journalJournal article

Published
<mark>Journal publication date</mark>11/2013
<mark>Journal</mark>European Financial Management
Issue number5
Volume19
Number of pages35
Pages (from-to)956-990
Publication StatusPublished
Early online date31/07/11
<mark>Original language</mark>English

Abstract

For a sample of 2,879 SEOs by US stocks from 1970 to 2004, this paper decomposes an average three-year post-issue buy-and-hold abnormal return of −25.9% (relative to size- and B/M-matched non-issuing stocks) into two components. One component, representing 41% of the total, is due to lower risk exposure. The second component, representing the remaining 59%, is abnormal performance related to the surprise element of the issue decision, which the paper attributes to managers’ private information that the market does not incorporate into the announcement return. This second component results in abnormal returns during the 16 months after the offering.

Bibliographic note

This is a pre-print of an article published in European Financial Management 19 (5), 2013. (c) Wiley-Blackwell