What Does the Market Learn from Stock Offering Revisions?
Financial Management Vol. 27 No. 1, Spring 1998
Posted: 15 Jun 1998
Abstract
We examine the disclosure of size revisions of seasoned stock offerings to see what information revisions impart to investors. Revisions could deliver firm-originated information, which discloses something managers know about the firm. Alternatively, they could disseminate market-originated information, which is information market participants have but which is not conveyed until trading takes place. Our results reject the notion that revisions reveal firm-originated news. Instead, the results are consistent with the market-originated news hypothesis and suggest a mechanism that investors and underwriters use to learn about the demand for an offering.
JEL Classification: G12, G14
Suggested Citation: Suggested Citation