Long Run Underperformance of Seasoned Equity Offerings: Fact or an Illusion?

53 Pages Posted: 16 Aug 1999

See all articles by Victor Soucik

Victor Soucik

School of Finance and Business Economics

David E. Allen

School of Mathematics and Statistics, The University of Sydney; Financial Research Network (FIRN); Department of Finance; School of Business and Law, Edith Cowan University

Date Written: July 1999

Abstract

This paper uses Australian data to show that the long run underperformance of seasoned equity offerings is related to the definition of 'long-run'. We demonstrate that following the period delimited by other writers as the long run, issuing firms turn around in their performance and in fact outperform their corresponding benchmarks, sometimes more than making up for the initial losses. We show that the initial underperformance affects the issues of companies performing more than one SEO in a similar fashion. Our results demonstrate that a poor performance following an SEO has, to an extent, a specific role as the mitigator of costs associated with the issue.

JEL Classification: G12

Suggested Citation

Soucik, Victor and Allen, David Edmund, Long Run Underperformance of Seasoned Equity Offerings: Fact or an Illusion? (July 1999). Available at SSRN: https://ssrn.com/abstract=172633 or http://dx.doi.org/10.2139/ssrn.172633

Victor Soucik

School of Finance and Business Economics ( email )

100 Joondalup Drive
Joondalup, WA 6027
Australia
+61 8 9400-5470 (Phone)
+61 8 9400-5271 (Fax)

David Edmund Allen (Contact Author)

School of Mathematics and Statistics, The University of Sydney ( email )

School of Mathematics and Statistics F07
University of Sydney
Sydney, New South Wales 2006
Australia

HOME PAGE: http://www.maths.usyd.edu.au

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

Department of Finance ( email )

Taiwan
Taiwan

School of Business and Law, Edith Cowan University

100 Joondalup Drive
Joondalup, WA 6027
Australia

HOME PAGE: http://www.dallenwapty.com

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