We thank Re-Jin Guo for helpful comments and discussions, as well as seminar participants at the University of Missouri and Seattle University. The suggestions of the referee and Arnie Cowan, the former editor, were very useful. We thank IBES for providing analyst earnings forecast data. We are responsible for all remaining errors.
Article first published online: 13 JUL 2010
© 2010, The Eastern Finance Association
Volume 45, Issue 3, pages 729–741, August 2010
How to Cite
Howe, J. S. and Zhang, S. (2010), SEO Cycles. Financial Review, 45: 729–741. doi: 10.1111/j.1540-6288.2010.00268.x
- Issue published online: 13 JUL 2010
- Article first published online: 13 JUL 2010
- information asymmetry;
- investment opportunities;
- investor sentiment;
- market timing
Public equity offerings by seasoned firms (SEOs) exhibit similar but less volatile cycles than initial public offerings (IPOs) of newly public firms. Our paper provides a comprehensive examination of the factors that cause variation in the number of firms issuing SEOs. Specifically, we use four factors from studies of IPOs as potential determinants of SEO cycles. We find that whether tested separately or collectively, only the demand for capital and market timing hypotheses receive strong empirical support in explaining SEO volume. Investor sentiment is not an important factor in explaining SEO volume, nor is information asymmetry.