Long Run Underperformance of Seasoned Equity Offerings: Fact or an Illusion?
53 Pages Posted: 16 Aug 1999
Date Written: July 1999
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: Suggested Citation