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Is There a Window of Opportunity for Seasoned Equity Issuance?

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Author Info
 Bayless, Mark
Chaplinsky, Susan
Abstract

The aggregate volume of equity issues is used to search for periods when seasoned equity capital can be raised at favorable terms. The authors find that the price reaction to equity issue announcements in high equity issue volume periods is approximately 200 basis points lower on average than in low equity issue volume periods. The lower price reaction in hot markets is economically important and is independent of the macroeconomic characteristics of hot and cold markets. The evidence supports the existence of windows of opportunity for equity issues that result at least partially from reduced levels of asymmetric information. Copyright 1996 by American Finance Association.

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Article provided by American Finance Association in its journal Journal of Finance.

Volume (Year): 51 (1996)
Issue (Month): 1 (March)
Pages: 253-78
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Handle: RePEc:bla:jfinan:v:51:y:1996:i:1:p:253-78

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  7. B. M. Burton & D. M. Power, 2003. "Evidence on the determinants of equity issue method in the UK," Applied Financial Economics, Taylor and Francis Journals, vol. 13(2), pages 145-157, January. [Downloadable!] (restricted)
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  10. Malcolm Baker & Jeremy C. Stein & Jeffrey Wurgler, 2002. "When Does the Market Matter? Stock Prices and the Investment of Equity-Dependent Firms," NBER Working Papers 8750, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  11. Dutordoir, M. & Gucht, L. van de, 2006. "Why Do Western European Firms Issue Convertibles Instead of Straight Debt or Equity?," Research Paper ERS-2006-056-F&A Revision, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus Uni. [Downloadable!]
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  13. Cécile Carpentier & Jean-François L'Her & Jean-Marc Suret, 2005. "The Costs of Issuing Private Versus Public Equity," CIRANO Working Papers 2005s-14, CIRANO. [Downloadable!]
  14. Wang, Jun & Zhang, Ge, 2003. "Heterogeneous beliefs and employee stock options," Working Papers 2003-14, University of New Orleans, Department of Economics and Finance. [Downloadable!]
  15. Pástor, Luboš & Veronesi, Pietro, 2003. "Stock Prices and IPO Waves," CEPR Discussion Papers 4002, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  16. Michelle Lowry & G. William Schwert, 2000. "IPO Market Cycles: Bubbles or Sequential Learning?," NBER Working Papers 7935, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  17. Frank Lin & Gerard Gannon, 2007. "Private Placement and Share Price Reaction: Evidence from the Australian Biotechnology and Health Care Sector," Accounting, Finance, Financial Planning and Insurance Series 2007_05, Deakin University, Faculty of Business and Law, School of Accounting, Economics and Finance. [Downloadable!]
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