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Tough times for seasoned equity offerings: performance during the COVID pandemic

Author

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  • Flore, Christian
  • Schiereck, Dirk
  • Zenzius, Marc

Abstract

This study analyzes the wealth effects of SEO announcements in the US during the COVID-19 pandemic and its main determinants. We find significantly negative abnormal returns of − 8.6%. This provides persuasive evidence that capital markets reacted particularly negative during this period, reflecting higher degrees of uncertainty. We furthermore find that larger firms experience a better SEO performance and that COVID-19 related biotech & healthcare firms react particularly negative. This effect is more negative the lower the company valuation beforehand.

Suggested Citation

  • Flore, Christian & Schiereck, Dirk & Zenzius, Marc, 2022. "Tough times for seasoned equity offerings: performance during the COVID pandemic," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 136278, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    • Handle: RePEc:dar:wpaper:136278
    Note: for complete metadata visit http://tubiblio.ulb.tu-darmstadt.de/136278/
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    File URL: https://link.springer.com/article/10.1007/s11573-022-01089-6
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    References listed on IDEAS

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    1. Michaely, Roni & Rubin, Amir & Vedrashko, Alexander, 2016. "Are Friday announcements special? Overcoming selection bias," Journal of Financial Economics, Elsevier, vol. 122(1), pages 65-85.
    2. Jung, Kooyul & Yong-Cheol, Kim & Stulz, Rene M., 1996. "Timing, investment opportunities, managerial discretion, and the security issue decision," Journal of Financial Economics, Elsevier, vol. 42(2), pages 159-185, October.
    3. Baig, Ahmed S. & Butt, Hassan Anjum & Haroon, Omair & Rizvi, Syed Aun R., 2021. "Deaths, panic, lockdowns and US equity markets: The case of COVID-19 pandemic," Finance Research Letters, Elsevier, vol. 38(C).
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    Cited by:

    1. Wolfgang Breuer & Andreas Pfingsten, 2022. "Non-standard issues in business finance: an overview," Journal of Business Economics, Springer, vol. 92(9), pages 1417-1430, November.
    2. Moritz Heiß & Lukas Müller & Marc Ringel, 2026. "Evidence on the non-linear relation between ESG and SEO announcement returns," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 50(1), pages 1-23, December.

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