CEO-friendly boards and seasoned equity offerings

Md Nazmul Hasan Bhuyan, Meena Subedi and Maimuna Akter

Journal of Behavioral and Experimental Finance, 2022, vol. 36, issue C

Abstract: This paper investigates the effect of CEO-friendly boards on seasoned equity offerings (SEOs). We provide evidence that CEO-friendly boards have a negative and statistically significant impact on SEO announcement returns. This finding suggests that SEO announcements by firms with CEO-friendly boards signal agency problems and, therefore, investors react negatively to such SEO announcements. We further provide evidence that the negative effect of CEO-friendly boards on SEO announcement returns is weaker in firms with high growth opportunities and high liquidity needs. Finally, we document that CEO-friendly boards are also negatively associated with post-SEO long-term performance.

Keywords: CEO-friendly boards; Seasoned equity offerings; Agency theory; Social capital theory; Growth opportunities; Liquidity needs; Post-SEO long-term returns (search for similar items in EconPapers)
JEL-codes: G30 G34 L82 Z13 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:eee:beexfi:v:36:y:2022:i:c:s2214635022000831

DOI: 10.1016/j.jbef.2022.100761

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