Skewness Preference and Seasoned Equity Offers

Don M. Autore and Jared DeLisle

The Review of Corporate Finance Studies, 2016, vol. 5, issue 2, 200-238

Abstract: We find that the degree of expected idiosyncratic skewness in seasoned equity issuers’ stock returns is an important determinant of flotation costs and subsequent abnormal stock performance. High skewness issuers incur significantly greater offer price discounts, particularly when institutional share allocation is largest, pay higher gross underwriting spreads, and exhibit poorer stock performance in the three years after issuance, all compared to low skewness issuers. These results suggest that skewness-induced overpricing increases the flotation costs of seasoned equity offers and leads to poor subsequent stock performance.

JEL-codes: G14 G30 G32 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (2)

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