How Much Does Investor Sentiment Really Matter for Equity Issuance Activity?

Francois Derrien () and Ambrus Kecskes

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Abstract: We study the extent to which investor sentiment matters for aggregate equity issuance activity. We focus on firms that are susceptible to investor sentiment and for which accurate measures of economic fundamentals are available. While sentiment on its own matters for equity issuance, it matters relatively little once we control for accurately measured fundamentals. Collectively, proxies for sentiment explain roughly 10 percentage points of the time-series variation of equity issuance beyond the roughly 40% explained by fundamentals. We conclude that investor sentiment does not seem to matter very much for aggregate equity issuance activity.

Keywords: IPOs; capital demands; economic fundamentals; investor sentiment (search for similar items in EconPapers)
Date: 2009-09
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Citations: View citations in EconPapers (9)

Published in European Financial Management, 2009, Vol.15,n°4, pp.787-813. ⟨10.1111/j.1468-036X.2008.00476.x⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-00459766

DOI: 10.1111/j.1468-036X.2008.00476.x

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