Abstract

http://ssrn.com/abstract=1460288
 
 

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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

Abstract:     
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

working papers series


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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
Australia
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
Australia
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