Seasoned equity offerings, market timing, and the corporate lifecycle

Harry DeAngelo, Linda DeAngelo and René Stulz

Journal of Financial Economics, 2010, vol. 95, issue 3, 275-295

Abstract: Both a firm's market-timing opportunities and its corporate lifecycle stage exert statistically and economically significant influences on the probability that it conducts a seasoned equity offering (SEO), with the lifecycle effect empirically stronger. Neither effect adequately explains SEO decisions because a near-majority of issuers are not growth firms and the vast majority of firms with high M/B ratios and high recent and poor future stock returns fail to issue stock. Since without the offer proceeds 62.6% of issuers would run out of cash (81.1% would have subnormal cash balances) the year after the SEO, a near-term cash need is the primary SEO motive, with market-timing opportunities and lifecycle stage exerting only ancillary influences.

Keywords: Seasoned; equity; offerings; (SEOs); Market; timing; Corporate; lifecycle; Cash; balances (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (181)

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