Post-SEO Performance and Institutional Investors
52 Pages Posted: 15 Mar 2012 Last revised: 26 Nov 2013
Date Written: July 26, 2013
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
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