Skewness Preference and Seasoned Equity Offers

Review of Corporate Finance Studies, Forthcoming

61 Pages Posted: 21 Mar 2011 Last revised: 30 Jun 2016

See all articles by Don M. Autore

Don M. Autore

Florida State University - College of Business

Jared DeLisle

Utah State University

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Date Written: December 1, 2015

Abstract

We find that the degree of expected idiosyncratic skewness in seasoned equity issuers’ stock returns is an important determinant of flotation costs and post-issue abnormal stock performance. High skewness issuers incur significantly greater offer price discounts, particularly when institutional share allocation is largest, pay higher gross underwriting spreads, and exhibit poorer post-issue stock performance in the three years after issuance, all compared to low skewness issuers. The results suggest that skewness-induced overpricing increases the flotation costs of seasoned equity offers and leads to poor post-issue stock performance.

Keywords: idiosyncratic skewness, seasoned equity offers, flotation costs, long run stock performance

JEL Classification: G14, G32

Suggested Citation

Autore, Don M. and DeLisle, Jared, Skewness Preference and Seasoned Equity Offers (December 1, 2015). Review of Corporate Finance Studies, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1787102 or http://dx.doi.org/10.2139/ssrn.1787102

Don M. Autore (Contact Author)

Florida State University - College of Business ( email )

821 ACADEMIC WAY, Room 314 RBA
P.O. Box 3061110
Tallahassee, FL 32306-1110
United States
850-644-7857 (Phone)

Jared DeLisle

Utah State University ( email )

Logan, UT 84322
United States
435-797-0885 (Phone)

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