How do investors underreact to seasoned equity offerings? Evidence from Taiwan's corporate governance evaluation

Kuo-Cheng Huang and Yu-Chun Wang

International Review of Financial Analysis, 2023, vol. 89, issue C

Abstract: This study examines whether long-run stock underperformance following seasoned equity offerings (SEOs) differs with a firm's corporate governance practices. We address this issue by using Taiwan's official annual corporate governance evaluation to represent the quality of firm governance. Results show that firms with better governance exhibit positive long-run post-SEO stock performance, whereas those with poor governance continue to be underperforming after SEOs. Our findings reveal that investor’ underreaction to SEOs varies with the levels of corporate governance.

Keywords: Corporate governance; Seasoned equity offerings (SEOs); Underreaction (search for similar items in EconPapers)
JEL-codes: G32 G34 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:89:y:2023:i:c:s1057521923002983

DOI: 10.1016/j.irfa.2023.102782

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