Do Firms Issue More Equity When Markets Become More Liquid?

Rogier Hanselaar, René Stulz and Mathijs van Dijk ()
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Rogier Hanselaar: Erasmus University Rotterdam

Working Paper Series from Ohio State University, Charles A. Dice Center for Research in Financial Economics

Abstract: Using quarterly data on IPOs and SEOs in 38 countries over the period 1995-2014, we show that changes in equity issuance are significantly and positively related to lagged changes in aggregate local market liquidity. This relation is at least as economically significant as the well-known relation between equity issuance and lagged stock returns. It survives the inclusion of proxies for market timing, capital market conditions, growth prospects, asymmetric information, and investor sentiment, as well as the exclusion of the financial crisis. Changes in liquidity are less relevant for firms that face greater financial pressures, firms in less financially developed countries, and during the financial crisis.

JEL-codes: F30 G15 G32 (search for similar items in EconPapers)
Date: 2017-10
New Economics Papers: this item is included in nep-cfn
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Do firms issue more equity when markets become more liquid? (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:ecl:ohidic:2016-24

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