Seasoned Equity Offerings : An Empirical Investigation

This study examines common stock price adjustments to announcements of underwritten common stock offerings. On average, a negative stock price change is observed, which is larger for industrials than for public utilities. Combination primary-secondary stock offerings and dual stock-bond offerings exhibit similar negative announcement effects. Combination offerings involving decreases in management shareholdings exhibit significantly larger negative announcement effects. Cross sectional analysis of stock announcement returns indicates a positive relationship to firms' leverage changes, and a negative relationship to prior stock returns and (for industrials) to decreases in management shareholdings