The Puzzling Wealth Loss around Equity Offerings: Is it Merely Price Pressure or is there More Information?

2005 ◽  
Author(s):  
Oya Altinkilic ◽  
Robert S. Hansen
Keyword(s):  
Equity Offerings ◽  
Price Pressure

Price Pressure and Overnight Seasoned Equity Offerings

2018 ◽  
Vol 53 (2) ◽  
pp. 837-866 ◽  
Author(s):  
Matthew T. Gustafson
Keyword(s):  
Stock Price ◽  
Seasoned Equity Offerings ◽  
Equity Offerings ◽  
Price Pressure ◽  
Price Decline ◽  
Issue Selling

Between 2009 and 2014, 75% of seasoned equity offerings (SEOs) were announced and issued overnight, compared to 27% between 2000 and 2008. Overnight issuers obtain a higher SEO offer price because they experience more favorable pre-offer returns. Consistent with these favorable returns being due to the avoidance of pre-issue selling pressure, non-overnight issuers experience a 2.5% pre-issue stock-price decline that reverses within 7 days. This post-issue reversal is increasing in SEO offer size and bigger following large pre-issue price declines. In contrast, returns following overnight offerings are less positive and unrelated to SEO offer size or pre-issue returns.

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