 First-move advantage in seasoned equity offerings: Evidence from European banksGlobal Finance Journal, 2019, vol. 41, issue C, 1-12 Abstract: The financial crisis that started in 2008 has generated significant losses for European banks, forcing them to undertake a series of seasoned equity offerings (SEOs) to reinforce their balance sheets in order to comply with regulatory capital requirements. As a result, they have produced repeated SEO waves in a relatively short time frame, when capital supply was limited due to the economic and financial context. We investigate the conditions at which European banks have been able to raise new equity capital by means of rights issues during the global financial crisis, demonstrating the existence of a first-move advantage: within a SEO wave, banks that acted first were able to complete the capital increase at more favorable conditions than their peers that acted later. We also show that first-movers experienced higher valuation ratios at the final cum-rights date compared to late-comers. As a result, first-movers obtained a double advantage: they could offer a lower discount on a price that embedded an higher valuation ratio. Keywords: Equity issue; Rights issue; Market timing; Global financial crisis; First-mover advantage; Seasoned equity offer (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:glofin:v:41:y:2019:i:c:p:1-12 DOI: 10.1016/j.gfj.2018.10.003 Access Statistics for this article Global Finance Journal is currently edited by Manuchehr Shahrokhi More articles in Global Finance Journal from Elsevier |
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