Do firms issue more equity when markets become more liquid?

Rogier M. Hanselaar, René Stulz and Mathijs van Dijk ()

Journal of Financial Economics, 2019, vol. 133, issue 1, 64-82

Abstract: Using quarterly data on initial public offerings (IPOs) and seasoned equity offerings (SEOs) for 37 countries from 1995 to 2014, we show that changes in equity issuance are positively related to lagged changes in aggregate local stock market liquidity. This relation is as economically significant as the well-known relation between equity issuance and lagged stock returns. It survives the inclusion of proxies for market timing, capital market conditions, growth prospects, asymmetric information, and investor sentiment. Changes in liquidity are less relevant for issuance by firms with greater financial pressures and by firms in less financially developed countries.

Keywords: Equity issuance; IPOs; SEOs; Market liquidity; International markets (search for similar items in EconPapers)
JEL-codes: G10 G15 G32 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (29)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0304405X18303362
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Do Firms Issue More Equity When Markets Become More Liquid? (2017)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:133:y:2019:i:1:p:64-82

DOI: 10.1016/j.jfineco.2018.12.004

Access Statistics for this article

Journal of Financial Economics is currently edited by G. William Schwert

More articles in Journal of Financial Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().