Wealth Effects of Seasoned Equity Offerings: A Meta Analysis

51 Pages Posted: 2 Dec 2015 Last revised: 22 Jun 2018

See all articles by Chris Veld

Chris Veld

Monash University

Patrick Verwijmeren

Erasmus University Rotterdam (EUR)

Yuriy Zabolotnyuk

Carleton University

Date Written: June 13, 2018

Abstract

We use meta-analysis to review studies on announcement effects associated with seasoned equity offerings. Our sample includes 199 studies from 38 leading finance journals and SSRN working papers. The studies cover different countries, but the U.S. is particularly well-represented with 131 studies. We find a statistically significant mean cumulative abnormal return of –0.98%. Abnormal returns are more negative for equity issues by U.S. companies and for non-U.S. rights issues and are less negative for private placements. In addition, wealth effects are more negative when the proceeds are used for debt reduction, when the SEO is issued shortly after IPO, and for issues by non-dividend-paying companies and industrial companies. We identify important avenues for future research.

Suggested Citation

Veld, Chris and Verwijmeren, Patrick and Zabolotnyuk, Yuriy, Wealth Effects of Seasoned Equity Offerings: A Meta Analysis (June 13, 2018). Available at SSRN: https://ssrn.com/abstract=2697375 or http://dx.doi.org/10.2139/ssrn.2697375

Chris Veld (Contact Author)

Monash University ( email )

Building 11E
Clayton, Victoria 3800
Australia

Patrick Verwijmeren

Erasmus University Rotterdam (EUR) ( email )

Burgemeester Oudlaan 50
3000 DR Rotterdam, Zuid-Holland 3062PA
Netherlands

Yuriy Zabolotnyuk

Carleton University ( email )

1125 Colonel By Drive
Ottawa, Ontario K1S5B6
Canada

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