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Post-SEO Performance and Institutional Investors

52 Pages Posted: 15 Mar 2012 Last revised: 26 Nov 2013

Roger M. Edelen

University of California, Davis - Graduate School of Management

Ozgur Ince

University of South Carolina - Moore School of Business

Gregory B. Kadlec

Virginia Polytechnic Institute & State University - Pamplin College of Business

Date Written: July 26, 2013

Abstract

We document a strong link between institutional investors and long-run stock return and operating performance following seasoned equity offerings (SEOs). Virtually all of the underperformance is confined to the top two quintiles of stocks with the largest increase in number of institutional investors prior to the post-issue underperformance. Moreover, non-SEO stocks with matching changes in institutional investors exhibit similar long-run underperformance to that of SEO stocks. Thus, we conclude that post-SEO underperformance is not due to the SEO per se but rather is a manifestation of more general effects associated with changes in institutional interest in a firm’s stock.

Keywords: Seasoned Equity Offerings, Post-Issuance Anomalies, Institutional Investors

JEL Classification: G14, G20, G31, G32, D92

Suggested Citation

Edelen, Roger M. and Ince, Ozgur and Kadlec, Gregory B., Post-SEO Performance and Institutional Investors (July 26, 2013). Available at SSRN: https://ssrn.com/abstract=2021408 or http://dx.doi.org/10.2139/ssrn.2021408

Roger Edelen

University of California, Davis - Graduate School of Management ( email )

One Shields Avenue
Davis, CA 95616
United States

Ozgur Ince (Contact Author)

University of South Carolina - Moore School of Business ( email )

1014 Greene Street
Columbia, SC 29208
United States
(803) 777-4905 (Phone)

Gregory Kadlec

Virginia Polytechnic Institute & State University - Pamplin College of Business ( email )

1016 Pamplin Hall
Blacksburg, VA 24061
United States
540-231-4316 (Phone)

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