The Long-Run Performance of Companies that Withdraw Seasoned Equity Offerings

Posted: 18 Oct 1999

See all articles by Michael J. Alderson

Michael J. Alderson

Saint Louis University - Richard A. Chaifetz School of Business

Brian L. Betker

Saint Louis University

Abstract

We examine the long-run stock price and operating performance of companies that withdraw seasoned equity offerings. Firms that withdraw an offering provide an opportunity to examine whether markets fully adjust to the information conveyed when managers announce the intent to issue shares, independent of any agency problems that might be intensified by the completion of the offering. As in completed seasoned equity offerings (SEOs), long-horizon event-time operating and stock price performance in sample firms is substantially lower than what is observed among control firms. Underperformance is also observed in an equal-weighted calendar-time analysis. Results are consistent with overpricing among small firms that attempt, but then withdraw, SEOs.

JEL Classification: G12, G31, G32

Suggested Citation

Alderson, Michael J. and Betker, Brian L., The Long-Run Performance of Companies that Withdraw Seasoned Equity Offerings. Available at SSRN: https://ssrn.com/abstract=173016

Michael J. Alderson (Contact Author)

Saint Louis University - Richard A. Chaifetz School of Business ( email )

3674 Lindell Blvd
St. Louis, MO 63108-3397
United States
314-977-8169 (Phone)
314-977-3897 (Fax)

Brian L. Betker

Saint Louis University ( email )

St. Louis, MO 63108-3397
United States

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