Skewness Preference and Seasoned Equity Offers

Review of Corporate Finance Studies, Forthcoming

Posted: 14 Jan 2016

See all articles by Don M. Autore

Don M. Autore

Florida State University - College of Business

Jared DeLisle

Utah State University

Multiple version iconThere are 2 versions of this paper

Date Written: January 2016

Abstract

We find that the degree of expected idiosyncratic skewness in seasoned equity issuers’ stock returns is an important determinant of flotation costs and subsequent abnormal stock performance. High skewness issuers incur significantly greater offer price discounts, particularly when institutional share allocation is largest, pay higher gross underwriting spreads, and exhibit poorer stock performance in the three years after issuance, all compared to low skewness issuers. These results suggest that skewness-induced overpricing increases the flotation costs of seasoned equity offers and leads to poor subsequent stock performance.

Keywords: idiosyncratic skewness, seasoned equity offers, flotation costs, long run stock performance

JEL Classification: G14, G32

Suggested Citation

Autore, Don M. and DeLisle, Jared, Skewness Preference and Seasoned Equity Offers (January 2016). Review of Corporate Finance Studies, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2714494

Don M. Autore (Contact Author)

Florida State University - College of Business ( email )

821 ACADEMIC WAY, Room 314 RBA
P.O. Box 3061110
Tallahassee, FL 32306-1110
United States
850-644-7857 (Phone)

Jared DeLisle

Utah State University ( email )

Logan, UT 84322
United States
435-797-0885 (Phone)

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