Why Do IPO Firms Conduct Primary Seasoned Equity Offerings?

Maretno Harjoto and John Garen

The Financial Review, 2003, vol. 38, issue 1, 103-125

Abstract: This study examines the reason behind the IPO firm's decision to conduct a primary seasoned equity offering (SEO). First, we develop a two–period model of blockholder incentives starting from the IPO stage. The model suggests that the blockholder has an incentive to conduct an SEO after the IPO when the firm is experiencing growth that was not anticipated at the IPO stage. Using a sample of IPO firms during 1992 to 1997, we find that IPO firms with higher unanticipated positive growth are more likely to conduct an SEO during the four years after their IPOs. We find that the firm's unanticipated shock and growth positively affect the relative size of the firm's seasoned equity offering. We also find that the firm's risk measure reduces the probability of conducting an SEO and reduces the relative size of an SEO.

Date: 2003
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
https://doi.org/10.1111/1540-6288.00037

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:finrev:v:38:y:2003:i:1:p:103-125

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0732-8516

Access Statistics for this article

The Financial Review is currently edited by Cynthia J. Campbell and Arnold R. Cowan

More articles in The Financial Review from Eastern Finance Association Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().