 Cost asymmetry around seasoned equity offeringsCosta, Mabel D’ and Solomon Opare Journal of Behavioral and Experimental Finance, 2022, vol. 34, issue C Abstract: We examine the asymmetric cost behaviour of firms during seasoned equity offerings (SEOs). Using a sample of US firms that issued SEOs over the period 1995–2020, we find a reduction in cost asymmetry for SEO firms. We also demonstrate that managerial resource adjustment decisions are driven by stronger external monitoring instead of managerial entrenchment. We find that competent managers make efficient resource adjustments, but they are able to do so when they operate under excess capacity. Further, we find that SEOs retain slack resources when demand declines in periods following the SEO. Finally, we find that the lower cost asymmetry during SEOs improves future firm performance. Our results are robust to several categories of cost, different measures of firm performance and different model specifications. This study contributes to the literature by documenting managerial cost management decisions around SEOs. Keywords: Agency problem; Cost stickiness; Seasoned equity offerings; External monitoring; Resource adjustment (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:beexfi:v:34:y:2022:i:c:s2214635022000260 DOI: 10.1016/j.jbef.2022.100668 Access Statistics for this article Journal of Behavioral and Experimental Finance is currently edited by Michael Dowling and Jürgen Huber More articles in Journal of Behavioral and Experimental Finance from Elsevier |
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