Anchoring on Historical High Prices and Seasoned Equity Offerings

51 Pages Posted: 27 Mar 2016 Last revised: 25 Apr 2019

See all articles by Armen Hovakimian

Armen Hovakimian

Baruch College - Zicklin School of Business

Huajing Hu

Adelphi University

Date Written: April 21, 2019


We document that firms’ financing decisions are affected by historical high prices. The ratio of the monthly high price to the 12-month historical high positively affects the probability of an SEO. Furthermore, the announcement market reaction is muted and the offering discount is smaller if the pre-announcement stock price is high relative to historical high. The results suggest that historical high price reference points may help managers rationally time SEOs to take advantage of market reception and minimize issuance costs.

Keywords: SEO, equity issue, reference point

JEL Classification: G32

Suggested Citation

Hovakimian, Armen and Hu, Huajing, Anchoring on Historical High Prices and Seasoned Equity Offerings (April 21, 2019). Available at SSRN: or

Armen Hovakimian (Contact Author)

Baruch College - Zicklin School of Business ( email )

One Bernard Baruch Way
Box B10-225
New York, NY 10010
United States
646-312-3490 (Phone)
646-312-3451 (Fax)


Huajing Hu

Adelphi University ( email )

1 South Ave
Garden City, NY NY 11530
United States

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