The Effect of Investor Attention on the Pricing of Seasoned Equity Offerings

Cristian Pinto-Gutierrez ()

No 20, Serie Working Papers from Universidad del Desarrollo, School of Business and Economics

Abstract: I examine the role of investor attention on seasoned equity offerings’ (SEOs) outcomes. I use an archive of Thomson Reuters’ news articles to proxy for investor attention. I find that the volumes of news articles prior to the offerings are positively associated with the offer price discounts of SEOs. Furthermore, the volumes of news articles are negatively associated with the cumulative abnormal returns three days around the SEOs. I conclude that the costs of equity increase with investor attention prior to SEOs. Overall, the evidence is consistent with the hypothesis that investor attention affects investors’ information processing in SEOs

Keywords: Investor attention; seasoned equity offerings; news analytics; media coverage; investor sentiment (search for similar items in EconPapers)
Pages: 36 pages
Date: 2015-08
New Economics Papers: this item is included in nep-mst
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Persistent link: https://EconPapers.repec.org/RePEc:dsr:wpaper:20

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