The effects of bank regulation stringency on seasoned equity offering announcements

Hui Li, Hong Liu and Chris Veld

Journal of International Money and Finance, 2019, vol. 91, issue C, 71-85

Abstract: We study the relation between bank regulation stringency and announcement effects of seasoned equity offerings across 21 countries. Under a low to moderate bank regulation environment, the market reacts more positively to the bank SEO announcements for an increase in the level of bank regulation. However, the bank SEO announcement effects become more negative if the bank regulation becomes too stringent. This inverted U-shaped relation is robust after we use the exogenous cross-country and cross-year variation in the timing of the Basel II adoption as an instrument to assess the causal impact of bank regulation on SEO announcement effects. Bank regulation has no significant impact of SEO announcement effects if the equity offering is involuntary.

Keywords: Bank regulation; Seasoned equity offerings; Moral hazard; Involuntary issuance (search for similar items in EconPapers)
JEL-codes: G01 G14 G18 G21 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0261560618306545
Full text for ScienceDirect subscribers only

Related works:
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:jimfin:v:91:y:2019:i:c:p:71-85

DOI: 10.1016/j.jimonfin.2018.11.001

Access Statistics for this article

Journal of International Money and Finance is currently edited by J. R. Lothian

More articles in Journal of International Money and Finance from Elsevier
Bibliographic data for series maintained by Catherine Liu ().