Fundamentals, market timing, and seasoned equity offerings
By: Harry DeAngelo, Linda DeAngelo, Ren ̌M. Stulz
Contributors: DeAngelo, Linda; Stulz, René M.; National Bureau of Economic Research
Series: NBER working paper series -- working paper 13285; Working paper series (National Bureau of Economic Research : Online) -- working paper no. 13285.
Publisher: National Bureau of Economic Research
Published: 2007
Place of publication: Cambridge, MA
Language: eng
Format: [electronic resource] /
Description: "Firms conduct SEOs to resolve a near-term liquidity squeeze, and not primarily to exploit market timing opportunities.  Without the SEO proceeds, 62.6% of issuers would have insufficient cash to implement their chosen operating and non-SEO financing decisions the year after the SEO.  Although the SEO decision is positively related to a firm's market-to-book (M/B) ratio and prior excess stock return and negatively related to its future excess return, these relations are economically immaterial.  For example, a 150% swing in future net of market stock returns (from a 75% gain to a 75% loss over three years) increases by only 1% the probability of an SEO in the immediately prior year.  Strikingly, most firms with quintessential "market timer" characteristics fail to issue stock and a non-trivial number of mature firms do issue stock, with current and former dividend payers raising more than half of all issue proceeds"--National Bureau of Economic Research web site.
Notes: Title from PDF file as viewed on 8/21/2007.

Includes bibliographical references.

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