Wealth Effects of Seasoned Equity Offerings: A Meta-Analysis

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    Author
    Veld, C; Verwijmeren, P; Zabolotnyuk, Y
    Date
    2020-03-01
    Source Title
    International Review of Finance
    Publisher
    Wiley
    University of Melbourne Author/s
    Verwijmeren, Patrick
    Affiliation
    Finance
    Metadata
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    Document Type
    Journal Article
    Citations
    Veld, C., Verwijmeren, P. & Zabolotnyuk, Y. (2020). Wealth Effects of Seasoned Equity Offerings: A Meta-Analysis. International Review of Finance, 20 (1), pp.77-131. https://doi.org/10.1111/irfi.12218.
    Access Status
    This item is embargoed and will be available on 2022-03-01
    URI
    http://hdl.handle.net/11343/258574
    DOI
    10.1111/irfi.12218
    Abstract
    We use meta-analysis to review studies on announcement effects associated with seasoned equity offerings. Our sample includes 199 studies from 38 leading finance journals and Social Sciences Research Network working papers. The studies cover different countries, but the US is particularly well-represented with 131 studies. We find a statistically significant mean cumulative abnormal return of -0.98%. Abnormal returns are more negative for equity issues by US companies and for non-US rights issues and are less negative for private placements. In addition, wealth effects are more negative when the proceeds are used for debt reduction, when the SEO is issued shortly after IPO, and for issues by nondividend-paying companies and industrial companies. We identify important avenues for future research.

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