Performance of Seasoned Equity Offerings in a Risk Adjusted Environment

44 Pages Posted: 17 Aug 1999

See all articles by David E. Allen

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

Victor Soucik

School of Finance and Business Economics

Date Written: July 1999

Abstract

This study will show that firms issuing seasoned equity have unique beta characteristics and that the beta itself has a very strong impact on the extent of post-issue underperformance. We develop a benchmark that accounts for such unique characteristic, and will subsequently measure the extent of the underperformance in light of a number of time definitions, including the 'real long-run' established to be in excess of the standard five-year time frame adopted by many writers. We shall further examine the impact of many extraneous factors on the attributes of post-issue performance. Finally, we will test whether the extent of initial issue underpricing bears an impact on the subsequent underperformance, which would then act as a mitigator of the issuing costs.

JEL Classification: G12

Suggested Citation

Allen, David Edmund and Soucik, Victor, Performance of Seasoned Equity Offerings in a Risk Adjusted Environment (July 1999). Available at SSRN: https://ssrn.com/abstract=172648 or http://dx.doi.org/10.2139/ssrn.172648

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

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)

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