Managing Underwriters and the Marketing of Seasoned Equity Offerings

Huang, Rongbing; Zhang, Donghang

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Managing Underwriters and the Marketing of Seasoned Equity Offerings

Journal of Financial and Quantitative Analysis, Forthcoming

43 Pages Posted: 25 Jul 2009 Last revised: 3 Aug 2009

See all articles by Rongbing Huang

Rongbing Huang

Kennesaw State University - Michael J. Coles College of Business

Donghang Zhang

University of South Carolina

Date Written: July 22, 2009

Abstract

Using a sample of 2,281 SEOs from 1995-2004, we show that the marketing of securities is important to issuers. The number of managing underwriters for an SEO is negatively related to the offer price discount, especially when the relative offer size is large and the stock return volatility is high. Larger investor networks of co-managing underwriters also lower offer price discounts. We argue that the evidence is supportive of the marketing hypothesis - the underwriters' marketing efforts can lower the offer price discount by shifting up and flattening the demand curve of an SEO.

Keywords: Marketing of Securities, Price Pressure, SEOs, Investment Banks, Managing Underwriters, Investor Networks, Offer Price Discounts

JEL Classification: G19, G24

Suggested Citation: Suggested Citation

Huang, Rongbing and Zhang, Donghang, Managing Underwriters and the Marketing of Seasoned Equity Offerings (July 22, 2009). Journal of Financial and Quantitative Analysis, Forthcoming, Available at SSRN: https://ssrn.com/abstract=1438349