Bank seasoned equity offers: do voluntary and involuntary offers differ?

Ozgur Ergungor (), C. N. V. Krishnan, Ajai K. Singh and Allan A. Zebedee

No 414, Working Papers (Old Series) from Federal Reserve Bank of Cleveland

Abstract: Recent research has shown that for industrial and utilities? seasoned equity offers (SEOs) the offer price discount is informative and has significant price effects. We examine whether the offer price discount for SEOs made by undercapitalized banks is different from those made by banks that were already overcapitalized prior to issue announcement. The former are labeled \"involuntary\" issues, and the latter \"voluntary.\" Voluntary issues are likely made by opportunistic managers at times when their stock is overvalued. Prior research has argued and provided evidence suggesting that for involuntary issues, such timing discretion may be limited. However, we find no significant differences in the issue-date discount, and in issue-date abnormal returns between the two types of issues. We find that trading volume increases dramatically at the offer date, stays at abnormally high levels over a 60-day post?issue period, and is accompanied by a positive abnormal return in the post-offer period for both types of issues.

Keywords: Bank; stocks (search for similar items in EconPapers)
Date: 2004
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://doi.org/10.26509/frbc-wp-200414 Persistent link
https://www.clevelandfed.org/-/media/project/cleve ... quity-offers-pdf.pdf Full text (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fedcwp:0414

Ordering information: This working paper can be ordered from

DOI: 10.26509/frbc-wp-200414

Access Statistics for this paper

More papers in Working Papers (Old Series) from Federal Reserve Bank of Cleveland Contact information at EDIRC.
Bibliographic data for series maintained by 4D Library ().