 Corporate governance and long run performance of seasoned equity issuersWassim Dbouk and Ahmad Ismail () Journal of Multinational Financial Management, 2010, vol. 20, issue 4-5, 159-177 Abstract: This paper examines the effect of corporate governance on the likelihood of issuing Seasoned Equity Offerings (SEO) between 1990 and 2005. It also examines the long-run post-issue performance using operating and stock return measures. Our results suggest that well-governed firms are less likely to issue equity. Nevertheless, when they do so, they outperform both matching non-issuers and issuers with minimal shareholders' rights from pre- to post-issue--with the highest operating out-performance occurring in the two post-issue years. A negative correlation exists between the post-issue performance and the anti-takeover measures, primarily, the protection associated with management entrenchment. Nonetheless, measures of board structure do not appear to affect the post-issue operating performance. Overall, corporate governance appears to be an effective internal control mechanism that restrains managers' incentives to either take an SEO issuance decision that does not serve the interests of shareholders or invest the capital raised in value-destroying projects. Keywords: Seasoned; equity; offers; Operating; performance; Corporate; governance; Long-run (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:mulfin:v:20:y:2010:i:4-5:p:159-177 Access Statistics for this article Journal of Multinational Financial Management is currently edited by I. Mathur and G. G. Booth More articles in Journal of Multinational Financial Management from Elsevier |
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