Crisis Capital: Private Placements During COVID‐19

Angelo Aspris, Edward Bi, Sean Foley and Jiri Svec

Abacus, 2024, vol. 60, issue 3, 607-626

Abstract: Equity issuance activity rose sharply across the corporate sector during the COVID‐19 crisis. We use this period of unprecedented uncertainty to study the effects of financial distress on seasoned equity offering returns. We find that firms increased their reliance on placements during this period of economic turmoil, with, on average, significantly larger issues, steeper discounts, and a greater focus on debt repayment. We show firms at greater risk of financial distress during the pandemic benefit significantly from signalling debt repayment as a priority, with stronger announcement date returns.

Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:bla:abacus:v:60:y:2024:i:3:p:607-626

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