Price Pressure and Overnight Seasoned Equity Offerings

56 Pages Posted: 17 Oct 2011 Last revised: 4 Oct 2017

See all articles by Matthew Gustafson

Matthew Gustafson

Pennsylvania State University - Smeal College of Business

Date Written: November 1, 2016

Abstract

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

Suggested Citation

Gustafson, Matthew, Price Pressure and Overnight Seasoned Equity Offerings (November 1, 2016). Journal of Financial and Quantitative Analysis (JFQA), Forthcoming; AFA 2013 San Diego Meetings Paper. Available at SSRN: https://ssrn.com/abstract=1945014 or http://dx.doi.org/10.2139/ssrn.1945014

Matthew Gustafson (Contact Author)

Pennsylvania State University - Smeal College of Business ( email )

East Park Avenue
University Park, PA 16802
United States

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