Wealth Effects of Seasoned Equity Offerings: A Meta Analysis
51 Pages Posted: 2 Dec 2015 Last revised: 22 Jun 2018
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.
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