Liquidity around SEO announcements: evidence from China

Weijie Chen, Wei Zhang, Zhenwei Lv and Gaofeng Zou

Asia-Pacific Journal of Accounting & Economics, 2022, vol. 29, issue 2, 472-486

Abstract: Our paper identifies a unique type of corporate event: SEO announcement effects. By employing various liquidity measures, we consistently find a significant decrease in liquidity after the release of announcements. The magnitude of liquidity change is associated with various firm characteristics. More importantly, we find the reduction in liquidity increases SEO discount. Our findings suggest that a part of SEO discount is risk compensation for uncertainty produced by the SEO plan.

Date: 2022
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DOI: 10.1080/16081625.2020.1754253

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Asia-Pacific Journal of Accounting & Economics is currently edited by Yin-Wong Cheung, Hong Hwang, Jeong-Bon Kim, Shu-Hsing Li and Suresh Radhakrishnan

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