Seasoned Equity Offers: The Effect of Insider Ownership and Float

Financial Management, Forthcoming

44 Pages Posted: 10 Mar 2009 Last revised: 24 Aug 2011

Vincent Intintoli

Clemson University

Kathleen M. Kahle

University of Arizona - Department of Finance

Date Written: March 17, 2010


SEO underpricing has increased dramatically since the early 1980s. While previous research has examined the determinants of SEO underpricing, these studies have not explored the effect of insider ownership on discounts. We find that this effect is twofold. First, higher insider ownership reduces float, thereby increasing price pressure and SEO underpricing; this effect is greatest in firms with low liquidity. Second, the greater the percentage of secondary shares offered, the lower the underpricing, suggesting that managers pressure banks to reduce underpricing when their personal wealth is at stake. However, we find that this negative relation is mitigated if the firm employs a prestigious underwriter.

Keywords: seasoned equity offerings, follow-on offerings, underpricing, float, marketing of securities, ownership

JEL Classification: G14, G24, G32

Suggested Citation

Intintoli, Vincent and Kahle, Kathleen M., Seasoned Equity Offers: The Effect of Insider Ownership and Float (March 17, 2010). Financial Management, Forthcoming. Available at SSRN:

Vincent Intintoli

Clemson University ( email )

Clemson, SC 29634
United States
864-656-2263 (Phone)

Kathleen M. Kahle (Contact Author)

University of Arizona - Department of Finance ( email )

McClelland Hall
P.O. Box 210108
Tucson, AZ 85721-0108
United States
520-621-7489 (Phone)

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