References (44)



Determinants and Market Impact of Seasoned Equity Offerings: The Case of A-REITs

Bwembya Chikolwa

Queensland University of Technology

Jinu Kim

University of New South Wales (UNSW)

August 21, 2009

22nd Australasian Finance and Banking Conference 2009

The paper examines the decision by Australian Real Estate Trusts (A-REITs) to issue seasoned equity offerings from 2000-2008 and stock market reaction to the offerings. The findings review that highly leveraged A-REITs with variable earnings are less likely to issue seasoned equity offerings. Inconsistent results for structure and type of properties held by the A-REIT do not allow for inference to be drawn. Similar to previous studies of seasoned equity offerings, we find a significant negative abnormal return associated with their announcement and no evidence of excessive leakage of information. Furthermore, market reaction differences to announcements of SEOs for the pre-global financial crisis (GFC) (2000-2006) and GFC eras (2007-2008) are noted with GFC era shareholders incurring larger abnormal return losses at 1.13% in comparison to the pre-GFC era shareholder loss of 0.34% on the SEO announcement day. Cross-sectional regressions show that the issued amount, leverage and profitability are significant factors affecting abnormal returns. Growth opportunities, tangibility, operating risk, size of A-REIT and other variables capturing A-REIT structure and property types held do not have an impact on abnormal returns.

Number of Pages in PDF File: 30

Keywords: A-REITs, Seasoned equity offerings, Market reaction, Global financial crisis

JEL Classification: G14, G19

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Date posted: August 24, 2009 ; Last revised: April 14, 2010

Suggested Citation

Chikolwa, Bwembya and Kim, Jinu, Determinants and Market Impact of Seasoned Equity Offerings: The Case of A-REITs (August 21, 2009). 22nd Australasian Finance and Banking Conference 2009. Available at SSRN: http://ssrn.com/abstract=1460288 or http://dx.doi.org/10.2139/ssrn.1460288

Contact Information

Bwembya Chikolwa (Contact Author)
Queensland University of Technology ( email )
2 George Street
Brisbane, Queensland 4000
61731384072 (Phone)
61731381170 (Fax)
HOME PAGE: http://www.bee.qut.edu.au
Jinu Kim
University of New South Wales (UNSW)
Faculty of the Built Environment
Sydney, NSW 2052
Feedback to SSRN

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References:  44

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