Long-Term Performance of Seasoned Equity Offerings: Benchmark Errors and Biases in Expectations

Financial Management, Vol. 9, Iss. 3, Autumn 2000

Posted: 15 May 2001

See all articles by Narasimhan Jegadeesh

Narasimhan Jegadeesh

Emory University - Department of Finance

Abstract

I investigate the long-term performance of firms that issue seasoned equity relative to a variety of benchmarks. I find that these firms significantly underperform all of my benchmarks over the five years following the equity issues. Across SEOs, I find similar levels of underperformance for both small firms and large firms, and both growth firms and value firms. The paper also shows that factor-model benchmarks are misspecified. Hence inferences on SEO underperformance based on such benchmarks are misleading. I also find that SEOs underperform their benchmarks by twice as much within earnings announcement windows as they do outside these windows.

Suggested Citation

Jegadeesh, Narasimhan, Long-Term Performance of Seasoned Equity Offerings: Benchmark Errors and Biases in Expectations. Financial Management, Vol. 9, Iss. 3, Autumn 2000. Available at SSRN: https://ssrn.com/abstract=267741

Narasimhan Jegadeesh (Contact Author)

Emory University - Department of Finance ( email )

Atlanta, GA 30322-2710
United States

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