Seasoned Equity Offerings, Valuation and Timing: Evidence from 1980's and 1990's

Jan Jindra ()
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Jan Jindra: Menlo College, 1000 El Camino Real, Atherton, CA 94026, USA

Quarterly Journal of Finance (QJF), 2013, vol. 03, issue 03n04, 1-32

Abstract: While the existing literature has focused on whether firms issue equity when they are overvalued, this paper examines whether there was a better time to issue seasoned equity when the valuation of a firm's shares might have been even more favorable. Using three valuation approaches, the findings suggest that: (1) the valuation of firms issuing seasoned equity is the most favorable at the time of the offering and (2) the estimated valuation errors are significantly related to the probability that firms will undertake a seasoned equity issue. These results are consistent with firms optimizing the timing of the seasoned equity offering so as to take maximum possible advantage of misvaluation of their shares.

Keywords: Seasoned equity offering; timing; valuation (search for similar items in EconPapers)
Date: 2013
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DOI: 10.1142/S2010139213500134

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