Rights statement: This is a pre-print of an article published in European Financial Management 19 (5), 2013. (c) Wiley-Blackwell
Submitted manuscript, 233 KB, PDF document
Research output: Contribution to Journal/Magazine › Journal article › peer-review
Research output: Contribution to Journal/Magazine › Journal article › peer-review
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TY - JOUR
T1 - Managers’ private information, investor underreaction and long-run SEO performance
AU - Bilinski, Pawel
AU - Strong, Norman
N1 - This is a pre-print of an article published in European Financial Management 19 (5), 2013. (c) Wiley-Blackwell
PY - 2013/11
Y1 - 2013/11
N2 - 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.
AB - 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.
KW - managerial private information
KW - investor underreaction
KW - seasoned equity issues
KW - long-run performance
U2 - 10.1111/j.1468-036X.2011.00616.x
DO - 10.1111/j.1468-036X.2011.00616.x
M3 - Journal article
VL - 19
SP - 956
EP - 990
JO - European Financial Management
JF - European Financial Management
SN - 1354-7798
IS - 5
ER -