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Heterogeneous effects of the SEC’s Securities Offering Reform

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  • Hemmings, Danial
  • Hodgkinson, Lynn
  • Wang, Qingwei

Abstract

The SEC’s Securities Offering Reform (SOR) was intended to address information problems prior to Seasoned Equity Offerings (SEO), thereby mitigating the problem of SEO overpricing. Consistent with the propensity of overpricing increasing with idiosyncratic stock return volatility (IVOL), we find greater capital market benefits from SOR for high IVOL issuers. Counter to concerns that SOR also enables issuers to hype their stock, we find no evidence of market conditioning following SOR, even among high IVOL issuers.

Suggested Citation

  • Hemmings, Danial & Hodgkinson, Lynn & Wang, Qingwei, 2018. "Heterogeneous effects of the SEC’s Securities Offering Reform," Economics Letters, Elsevier, vol. 170(C), pages 131-135.
  • Handle: RePEc:eee:ecolet:v:170:y:2018:i:c:p:131-135
    DOI: 10.1016/j.econlet.2018.06.013
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    References listed on IDEAS

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    More about this item

    Keywords

    Securities Offering Reform; Seasoned Equity Offerings; Idiosyncratic volatility; Market conditioning;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General

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