SEOs: Friendly or threatening game for rivals?

Carène Boucher and Maher Kooli

International Review of Economics & Finance, 2021, vol. 75, issue C, 130-144

Abstract: We examine the effects of large seasoned equity offerings (SEOs) on industry rivals. We provide evidence that rivals react positively to completed SEOs in their industry and negatively to SEO withdrawals. These short-term SEO effects are stronger in the case of primary offerings than in the case of secondary offerings. Rivals also appear to experience improvements in their long-run financial and operating performances. Further, we find that the likelihood of rivals’ survival is greater subsequent to primary issues than secondary ones. Overall, our results are consistent with the information effects hypothesis. Thus, large SEOs convey favorable information regarding the prospects of an industry.

Keywords: Seasoned equity offerings; Rivals; Competitive effects; Information effects; Withdrawal (search for similar items in EconPapers)
JEL-codes: G14 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:75:y:2021:i:c:p:130-144

DOI: 10.1016/j.iref.2021.04.004

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