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Seasoned equity offering announcements and the returns on European bank stocks and bonds

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  • Marco Botta
  • Luca Colombo

Abstract

We analyse, by means of appropriate event studies, the returns following seasoned equity offering announcements made by western European banks between 2008 and 2014. Consistently with the pertinent literature on non-financial companies, we find that shareholders experience negative returns. We highlight that the same occurs for bondholders, although not surprisingly to a smaller extent. Overall, our results show that seasoned equity offering announcements play an important signalling role also in the banking industry, despite the tight regulation and supervision by banking authorities, which should in principle reduce the impact on pricing of the information asymmetries about banks’ financial conditions.

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  • Marco Botta & Luca Colombo, 2019. "Seasoned equity offering announcements and the returns on European bank stocks and bonds," Applied Economics, Taylor & Francis Journals, vol. 51(13), pages 1339-1359, March.
    • Handle: RePEc:taf:applec:v:51:y:2019:i:13:p:1339-1359
    DOI: 10.1080/00036846.2018.1527450
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    Cited by:

    1. Eden, Lorraine & Indro, Daniel C. & Miller, Stewart R. & Richards, Malika, 2021. "Valuation uncertainty, home and host market uncertainty, and cross-border seasoned equity offerings," International Business Review, Elsevier, vol. 30(3).

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