SEOs in a 'Hot Market': evidence of timing
This study analyses the financing decision of raising equity through a rights issue in a developing market, the Athens Stock Exchange (ASE), during a particular emerging period. Specifically, this study examines the information content of accounting items derived from published financial statements the year prior to a 'hot' period in explaining post-issue stock price performance. We are using data from listed companies in the ASE during the 'hot period' of year 1999 when stock prices burst and an unusual large number of seasoned equity offerings (SEOs) took place. Our empirical results do not verify a statistically significant relationship between discretionary accruals in the year preceding the issue and post-issue stock returns. Moreover, historical accounting items do not provide value relevant information and cannot be used to explain post-issue stock returns. Market trend prior to the issuing is proved to be the only significant variable in explaining post SEO returns. The overall findings are in line with the market timing theory which claims that managers just time their equity issues in an upward moving market in order to increase the offering proceeds.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 17 (2007)
Issue (Month): 14 ()
|Contact details of provider:|| Web page: http://www.tandfonline.com/RAFE20|
|Order Information:||Web: http://www.tandfonline.com/pricing/journal/RAFE20|
When requesting a correction, please mention this item's handle: RePEc:taf:apfiec:v:17:y:2007:i:14:p:1179-1190. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Michael McNulty)
If references are entirely missing, you can add them using this form.