scholarly journals Fundamentals, Market Timing, and Seasoned Equity Offerings

2007 ◽  
Author(s):  
Harry DeAngelo ◽  
Linda DeAngelo ◽  
René Stulz
Keyword(s):  
Market Timing ◽  
Seasoned Equity Offerings ◽  
Equity Offerings

Seasoned equity offerings, market timing, and the corporate lifecycle

2010 ◽  
Vol 95 (3) ◽  
pp. 275-295 ◽  
Author(s):  
Harry DeAngelo ◽  
Linda DeAngelo ◽  
René M. Stulz
Keyword(s):  
Market Timing ◽  
Seasoned Equity Offerings ◽  
Equity Offerings

Underpricing and market timing in SEOs of European REITs and REOCs

2019 ◽  
Vol 38 (3) ◽  
pp. 163-180
Author(s):  
Felix Lorenz
Keyword(s):  
Real Estate ◽  
Lower Cost ◽  
Market Timing ◽  
Seasoned Equity Offerings ◽  
Equity Offerings ◽  
Real Estate Investment ◽  
Content Type ◽  
Price Discounts ◽  
Property Companies ◽  
Practical Implications

Purpose The purpose of this paper is to contribute to the literature on seasoned equity offerings (SEOs) by examining the underpricing of European real estate corporations and identifying determinants explaining the phenomenon of setting the offer price at a discount at SEOs. Design/methodology/approach With a sample of 470 SEOs of European real estate investment trusts (REITs) and real estate operating companies (REOCs) from 2004 to 2018, multivariate regression models are applied to test for theories on the pricing of SEOs. This paper furthermore tests for differences in underpricing for REITs and REOCs as well as specialized and diversified property companies. Findings Significant underpricing of 3.06 percent is found, with REITs (1.90 percent) being statistically less underpriced than REOCs (5.08 percent). The findings support the market timing theory by showing that managers trying to time the equity market gain from lower underpricing. Furthermore, underwritten offerings are more underpriced to reduce the risk of the arranging bank, but top-tier underwriters are able to reduce offer price discounts by being more successful in attracting investors. The results cannot support the value uncertainty hypothesis, but they are in line with placement cost stories. In addition, specialized property companies are subject to lower underpricing. Practical implications An optimal issuance strategy taking into account timing, relative offer size and the choice of the underwriter can minimize the amount of “money left on the table” and therefore contribute to the lower cost of raising capital. Originality/value This is the first study to investigate SEO underpricing for European real estate corporations, pricing differences of REITs and REOCs in seasoned offerings and the effect of market timing on the pricing of SEOs.

scholarly journals The Relationship between Earnings Management and Equity Market Timing

2021 ◽  
Vol 25 (6) ◽  
Author(s):  
Matheus da Costa Gomes ◽  
João Paulo Augusto Eça ◽  
Marcelo Botelho da Costa Moraes ◽  
Maurício Ribeiro do Valle
Keyword(s):  
Earnings Management ◽  
Market Timing ◽  
Careful Analysis ◽  
Seasoned Equity Offerings ◽  
Equity Market ◽  
Net Income ◽  
Equity Offerings ◽  
The Relationship ◽  
Profitability Ratios ◽  
Equity Market Timing

ABSTRACT Objective: this study aims to verify if companies that practice equity market timing have higher earnings management levels around the stock issue period. Method: we used a sample of 68 seasoned equity offerings (SEOs) in Brazil from 2004-2015. First, we ranked the sample among companies that used market timing (timers) behavior in the SEOs and those that did not (non-timers). Second, we estimated each company’s earnings management levels by the Modified Jones and Modified Jones with ROA models. Finally, we tested the relationship between earnings management and equity market timing using a linear regression model. Results: the results show that the timers managed earnings more intensively in the quarters around SEOs than the non-timers. This happens to increase net income and consequently improve profitability ratios. Therefore, to explore opportunity windows, managers can inflate accounting profit through accruals and influence the market’s ability to correctly price shares. Conclusion: Brazilian companies practice earnings management as a way of exploiting opportunity windows in the stock market. The conclusion reinforces the need for a careful analysis of the company’s profits by investors, analysts, auditors, and regulators while allowing efforts to avoid such practices through compliance, governance, and regulation.

The effects of lines of credit on market timing and the underpricing of seasoned equity offerings

2019 ◽  
Vol 18 (1) ◽  
pp. 157-175
Author(s):  
Anh Ngo ◽  
Oscar Varela ◽  
Xie Feixue
Keyword(s):  
Market Timing ◽  
Seasoned Equity Offerings ◽  
Equity Market ◽  
Standard Errors ◽  
Equity Offerings ◽  
Timing Behavior ◽  
Content Type ◽  
Lines Of Credit ◽  
Two Measures ◽  
The Relationship

PurposeThis paper aims to examine the effects of lines of credit on a firm’s market timing behavior and the pricing of its seasoned equity offerings (SEOs). It shows that firms with lines of credit are more likely to time the equity market and receive less underpricing for their SEOs. It also shows that the propensity of firms with lines of credit to time the market is particularly significant for financially unconstrained firms. The results are robust to different measures of market timing and financial constraint, and these fill the gap in the literature that, to the best of the authors’ knowledge, has not examined the relation between lines of credit, market timing and value creation as related to equity offerings.Design/methodology/approachThe paper first investigates the relationship between lines of credit and the probability of a firm issuing SEOs using a logistic model. The paper then investigates whether firms with lines of credit engage in market timing behavior using ordinary least square regressions with two-way cluster-robust standard errors (standard errors that are robust to simultaneous correlation along two dimensions, such as firms and time) with two measures of market timing and two measures for financial constraints. Finally, the paper examines the relationship between lines of credit and SEO underpricing.FindingsIt was found that firms with lines of credit are more likely to time the equity market, perhaps driven by the financing flexibility resulting from the existence of their lines of credit. This finding comes mainly from financially unconstrained firms, as such an effect is not observed among financially constrained firms with lines of credit. It is further shown that firms with lines of credit are more likely to experience less severe equity underpricing, perhaps owing to market timing behavior. The results provide evidence on how lines of credit may create value to a firm through its market timing.Originality/valueThe paper sheds new light on how lines of credit may create value to a firm through the market timing channel.

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