Timing of Seasoned Equity Offerings: A Duration Analysis
32 Pages Posted: 21 Apr 2011 Last revised: 15 Mar 2014
Date Written: April 19, 2011
Abstract
Using a sample of 6,198 US firms that went public from 1975-2004, this paper documents that firms often return for a new round of equity issuance shortly after the preceding one. First SEOs following the IPO are more likely to be conducted at a faster speed than subsequent (follow-on) SEOs. Duration analysis shows that recent stock returns and future growth opportunities are important determinants of the timing of SEOs. First SEOs differ from follow-on SEOs in two aspects: (1) Growth opportunities correlated with the overall economic growth are more important for follow-on SEOs than for first SEOs. (2) First SEOs are more driven by the incentive to time the stock market, whereas follow-on SEOs are more driven by growth needs.
Keywords: Seasoned Equity Offerings, Timing, Duration Analysis
JEL Classification: G30, G32, C41
Suggested Citation: Suggested Citation
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