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Do group-affiliated firms time their equity offerings?

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  • Wadhwa, Kavita
  • Neupane, Suman
  • Syamala, Sudhakara Reddy

Abstract

Using IPO and SEO data from the Indian capital market, we examine whether group-affiliated firms are able to time their equity issuance relative to stand-alone firms. Group-affiliated firms have access to internal capital markets, which, we argue should allow these firms to raise external capital at an opportune time. Using both direct and indirect measures of market timing, the main finding of our paper is that there are significant difference in how group-affiliated and stand-alone firms raise capital through IPOs and SEOs. We find that stand-alone firms raise more capital and time their IPO offerings whereas group-affiliated firms raise more capital and time their SEO offerings. Consistent with the notion of market timing, we find that the long run underperformance is pronounced for stand-alone IPO and group-affiliated SEO offerings.

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  • Wadhwa, Kavita & Neupane, Suman & Syamala, Sudhakara Reddy, 2019. "Do group-affiliated firms time their equity offerings?," Pacific-Basin Finance Journal, Elsevier, vol. 54(C), pages 73-92.
    • Handle: RePEc:eee:pacfin:v:54:y:2019:i:c:p:73-92
    DOI: 10.1016/j.pacfin.2019.02.004
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    Cited by:

    1. Syamala, Sudhakara Reddy & Wadhwa, Kavita, 2019. "Foreign institutional investors’ trading and information dissemination in emerging markets: Further evidence," Research in International Business and Finance, Elsevier, vol. 49(C), pages 301-314.

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    More about this item

    Keywords

    Public equity offerings; Market-timing; Group-affiliated firms; Stand-alone firms; Long–run performance;
    All these keywords.

    JEL classification:

    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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