Seasoned equity offerings, operating performance and overconfidence: Evidence from the UK

Panagiotis Andrikopoulos

Journal of Economics and Business, 2009, vol. 61, issue 3, 189-215

Abstract: Prior research on seasoned equity offerings in UK shows that equity issuers report a significant long-term underperformance in the period following the event. However, the factors contributing to such underperformance are not yet fully explored. Using a sample of rights issues for the period 1988-1998, this study suggest that the long-term underperformance is significantly related to a deterioration of companies' operating fundamentals in the post-offering period. Further comparison between "Best" and "Worst" post-issue performers reveals that long-term underperformance is predominantly robust in the case of fastgrowing firms with over-optimistic management. This evidence is consistent with the managerial overconfidence and "empire-building" hypotheses.

Keywords: Rights; issues; Seasoned; equity; offerings; Long-term; performance; Operating; performance; Managerial; overconfidence (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jebusi:v:61:y:2009:i:3:p:189-215

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