Do share offerings increase payouts?

Hichem Boulifa and Konari Uchida

Pacific-Basin Finance Journal, 2024, vol. 85, issue C

Abstract: This paper investigates the effects of pure secondary share offerings, which decrease ownership concentration without raising funds, to highlight the corporate governance effect of equity offerings. We find that firms conducting secondary offerings significantly increase dividend payouts after the transaction. Although the announcement of secondary offerings receives negative stock price reactions in the short run, we witness a reversal and positive performance in the long term. While previous studies commonly suggest equity offerings cause negative stock returns, our results reveal that these transactions make managers care about minority shareholder wealth by unwinding ownership concentration.

Keywords: Secondary share offering; Ownership concentration; Corporate governance; Payouts; Minority shareholder wealth (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:85:y:2024:i:c:s0927538x24000982

DOI: 10.1016/j.pacfin.2024.102347

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