SEO Cycles

Authors


  • 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.

Corresponding author: Division of Finance and Economics, Marshall University, One John Marshall Drive, Huntington, WV 25755; Phone: (304) 696-2605; Fax: (304) 696-3662; E-mail: zhangs@marshall.edu.

Abstract

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.

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