Price Pressure and Overnight Seasoned Equity Offerings
56 Pages Posted: 17 Oct 2011 Last revised: 4 Oct 2017
Date Written: November 1, 2016
Between 2009 and 2014, 75% of seasoned equity offerings (SEOs) were announced and issued overnight, compared to 27% between 2000 and 2008. Overnight issuers obtain a higher SEO offer price because they experience more favorable pre-offer returns. Consistent with these favorable returns being due to the avoidance of pre-issue selling pressure, non-overnight issuers experience a 2.5% pre-issue stock price decline that reverses within seven days. This post-issue reversal is increasing in SEO offer size and bigger following large pre-issue price declines. In contrast, the returns following overnight offerings are less positive and unrelated to SEO offer size or pre-issue returns.
Keywords: Overnight Seasoned Equity Offering, Price pressure, SEO Discount, Accelerated SEO
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