Is the Demand Curve for Stocks Downward-Sloping? New Evidence from Seasoned Equity Offerings

2009 ◽  
Author(s):  
Zhangkai Huang ◽  
Longkai Zhao ◽  
Xiaoyuan Mao
Keyword(s):  
Demand Curve ◽  
Seasoned Equity Offerings ◽  
Equity Offerings ◽  
New Evidence

Managing Underwriters and the Marketing of Seasoned Equity Offerings

2010 ◽  
Vol 46 (1) ◽  
pp. 141-170 ◽  
Author(s):  
Rongbing Huang ◽  
Donghang Zhang
Keyword(s):  
Stock Return ◽  
Demand Curve ◽  
Seasoned Equity Offerings ◽  
Return Volatility ◽  
Equity Offerings ◽  
Price Discount ◽  
Stock Return Volatility ◽  
Price Discounts

AbstractUsing a sample of 2,281 seasoned equity offerings (SEOs) from 1995 to 2004, we show that the marketing of securities is important to issuers. The number of managing underwriters for an SEO is negatively related to the offer price discount, especially when the relative offer size is large and the stock return volatility is high. Larger investor networks of comanaging underwriters also lower offer price discounts. We argue that the evidence is supportive of the marketing hypothesis: The underwriters’ marketing efforts can lower the offer price discount by shifting up and flattening the demand curve of an SEO.

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