The Equity in Equity Issuances

Brav, Alon P.; Geczy, Christopher; Gompers, Paul A.

doi:10.2139/ssrn.138492

Abstract

References (37)

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The Equity in Equity Issuances

Alon P. Brav

Duke University - Fuqua School of Business

Christopher Geczy

University of Pennsylvania - The Wharton School, Finance Department

Harvard Business School - Finance Unit; Harvard University - Entrepreneurial Management Unit; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI)

October 1998

Abstract:
We investigate the robustness of the long-run underperformance of initial public offering (IPO) and seasoned equity offering (SEO) firms from 1975-1992. The conclusion that issuer underperformance is unique is questioned by our results. We find that underperformance is largely concentrated in the smallest issuing firms. IPO firms perform identical to nonissuing firms matched on the basis of size and book-to-market. SEO firm returns can be priced by four factor regression models indicating common covariation in SEO returns with nonissuing firms. Furthermore, SEO underperformance disappears for issuances beyond the first SEO. We find that the results are robust to purging benchmarks and factor returns of IPO and SEO firms.

Number of Pages in PDF File: 48

JEL Classification: G1, G2

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Date posted: November 13, 1998

Suggested Citation

Brav, Alon P., Geczy, Christopher Charles and Gompers, Paul A., The Equity in Equity Issuances (October 1998). Available at SSRN: http://ssrn.com/abstract=138492 or http://dx.doi.org/10.2139/ssrn.138492

Contact Information

Alon P. Brav Duke University - Fuqua School of Business ( email ) Box 90120 Durham, NC 27708-0120 United States 919-660-2908 (Phone) 919-684-2818 (Fax)
Christopher Charles Geczy University of Pennsylvania - The Wharton School, Finance Department ( email ) The Wharton School 3620 Locust Walk Philadelphia, PA 19104 United States (215) 898-1698 (Phone) (215) 898-6200 (Fax)
Paul A. Gompers (Contact Author) Harvard Business School - Finance Unit ( email ) Boston, MA 02163 United States 617-495-6297 (Phone) 617-496-8443 (Fax)
Harvard University - Entrepreneurial Management Unit ( email ) Cambridge, MA 02163 United States
National Bureau of Economic Research (NBER) 1050 Massachusetts Avenue Cambridge, MA 02138 United States
European Corporate Governance Institute (ECGI) c/o ECARES ULB CP 114 B-1050 Brussels Belgium HOME PAGE: http://www.ecgi.org

Abstract

References (37)

The Equity in Equity Issuances

Alon P. Brav

Christopher Geczy

Paul A. Gompers

Date posted: November 13, 1998

Suggested Citation

Contact Information

Alon P. Brav

Christopher Charles Geczy

Paul A. Gompers (Contact Author)