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The Impact of Global Equity Offerings

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Author Info

  • Susan Chaplinsky

    (Colgate Darden Graduate School of Business Administration, the University of Virginia,)

  • Latha Ramchand

    (College of Business Administration, the University of Houston)

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    Abstract

    This article examines the impact of U.S. firms issuing equity in multiple markets. We compare the stock price reactions to announcements of global equity offers to a control group of issues offered exclusively in the domestic U.S. market. All else equal, the adverse price reaction that typically accompanies equity issuance is reduced by 0.8 percent when some shares are sold abroad. The overall evidence suggests global offers are effective in expanding demand and reducing the price pressure effects associated with share issuance. The beneits of global offers appear to be associated with an increase in the number of foreign shareholders. Copyright The American Finance Association 2000.

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    Bibliographic Info

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

    Volume (Year): 55 (2000)
    Issue (Month): 6 (December)
    Pages: 2767-2789

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    Handle: RePEc:bla:jfinan:v:55:y:2000:i:6:p:2767-2789

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    Cited by:
    1. Claessens, Stijn & Schmukler, Sergio L., 2007. "International financial integration through equity markets : which firms from which countries go global ?," Policy Research Working Paper Series 4146, The World Bank.
    2. Hasan, Iftekhar & Schmiedel, Heiko, 2004. "Networks and equity market integration: European evidence," International Review of Financial Analysis, Elsevier, vol. 13(5), pages 601-619.
    3. Cai, Kelly Nianyun & Lee, Hei Wai & Valero, Magali, 2010. "Changing underwriting practices on underpricing of U.S. global initial public offerings," Journal of Business Research, Elsevier, vol. 63(12), pages 1317-1323, December.
    4. Karolyi, G. Andrew, 2012. "Corporate governance, agency problems and international cross-listings: A defense of the bonding hypothesis," Emerging Markets Review, Elsevier, vol. 13(4), pages 516-547.
    5. Harvey, Campbell R. & Lins, Karl V. & Roper, Andrew H., 2004. "The effect of capital structure when expected agency costs are extreme," Journal of Financial Economics, Elsevier, vol. 74(1), pages 3-30, October.
    6. Miller, Darius P. & Puthenpurackal, John J., 2005. "Security fungibility and the cost of capital: evidence from global bonds," Working Paper Series 0426, European Central Bank.
    7. Iftekhar Hasan & Heiko Schmiedel, 2004. "Do networks in the stock exchange industry pay off? European evidence," International Finance 0405002, EconWPA.
    8. Autore, Don M. & Kovacs, Tunde, 2014. "Investor recognition and seasoned equity offers," Journal of Corporate Finance, Elsevier, vol. 25(C), pages 216-233.
    9. Massa, Massimo & ┼Żaldokas, Alminas, 2014. "Investor base and corporate borrowing: Evidence from international bonds," Journal of International Economics, Elsevier, vol. 92(1), pages 95-110.
    10. Sarkissian, Sergei & Schill, Michael J., 2004. "Are There Permanent Valuation Gains to Overseas Listing? Evidence from Market Sequencing and Selection," Working Papers 05-4, University of Pennsylvania, Wharton School, Weiss Center.
    11. Altinkilic, Oya & Hansen, Robert S., 2003. "Discounting and underpricing in seasoned equity offers," Journal of Financial Economics, Elsevier, vol. 69(2), pages 285-323, August.

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