Seasoned Equity Offerings on the Nasdaq: New Evidence on the Asymmetric Information Discount

2010 ◽  
Author(s):  
Michael Adler ◽  
Nicholas Shea
Keyword(s):  
Asymmetric Information ◽  
Seasoned Equity Offerings ◽  
Equity Offerings ◽  
New Evidence

scholarly journals On the Conditioning of the Financial Market’s Reaction to Seasoned Equity Offerings

2006 ◽  
Vol 11 (2) ◽  
pp. 141-154 ◽  
Author(s):  
Onur Arugaslan ◽  
Louise Miller
Keyword(s):  
Asymmetric Information ◽  
Emerging Markets ◽  
Financial Market ◽  
Prior Information ◽  
Seasoned Equity Offerings ◽  
Common Stock ◽  
Equity Offerings ◽  
Seasoned Equity Offering ◽  
Growth Prospects ◽  
The U.S

Consistent with asymmetric information arguments, prior research has shown that the financial market typically responds negatively to the announcement of a seasoned equity offering (SEO). Korajczyk and Levy (2003), however, suggest that while some firms time the issuance of their common stock to take advantage of outside investor overvaluations, financially constrained firms do not. We examine whether prior information on how financially constrained a firm is along with its growth prospects influences the financial market’s response to the firm’s announcement to sell common stock. We find evidence that the financial market does condition its response upon such information using a sample of SEOs from the U.S. Our results also have implications for the financial market’s reaction to SEOs/rights offerings in emerging markets.

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