Abstract
Prior research on seasoned equity offerings in UK shows that equity issuers report a significant long-term underperformance in the period following the event. However, the factors contributing to such underperformance are not yet fully explored. Using a sample of rights issues for the period 1988-1998, this study suggest that the long-term underperformance is significantly related to a deterioration of companies' operating fundamentals in the post-offering period. Further comparison between "Best" and "Worst" post-issue performers reveals that long-term underperformance is predominantly robust in the case of fastgrowing firms with over-optimistic management. This evidence is consistent with the managerial overconfidence and "empire-building" hypotheses.
Original language | English |
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Pages (from-to) | 189-215 |
Number of pages | 27 |
Journal | Journal of Economics and Business |
Volume | 61 |
Issue number | 3 |
DOIs | |
Publication status | Published - May 2009 |
Externally published | Yes |
Keywords
- Long-term performance
- Managerial overconfidence
- Operating performance
- Rights issues
- Seasoned equity offerings
ASJC Scopus subject areas
- General Business,Management and Accounting
- Economics and Econometrics