The Impact of Global Equity Offerings


  • Susan Chaplinsky,

  • Latha Ramchand

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    • Susan Chaplinsky is from the Colgate Darden Graduate School of Business Administration, the University of Virginia, and Latha Ramchand is from the College of Business Administration, the University of Houston. We thank the participants at the 1996 American Finance Association Meetings, the Financial Management Association Meetings and the workshop participants at the University of Houston, University of Maryland, Virginia Polytechnic Institute, and David Blackwell, John Chalmers, Bob Conroy, Kathleen Weiss Hanley, Robert Hansen, Narayan Jayaraman, Deborah Lucas, Felicia Marston, James F. Miller, Managing Director, Equity-Capital Markets, Merrill Lynch, Frank Packer, Rich Pettit, René Stulz, the editor, and an anonymous referee for valuable comments. We also thank Patricia Budd at the Merrill Lynch Investment Bank Library for help in obtaining prospectuses and Haiming Xu and Pricha Sethapakdi for research assistance.


This article examines the impact of U.S. firms issuing equity in multiple markets. We compare the stock price reactions to announcements of global equity offers to a control group of issues offered exclusively in the domestic U.S. market. All else equal, the adverse price reaction that typically accompanies equity issuance is reduced by 0.8 percent when some shares are sold abroad. The overall evidence suggests global offers are effective in expanding demand and reducing the price pressure effects associated with share issuance. The beneits of global offers appear to be associated with an increase in the number of foreign shareholders.