Stock price informativeness and the impact of Seasoned Equity Offerings on the firm’s stock liquidity

Thi Xuan Dung Nguyen, Radu Burlacu () and Sonia Jimenez-Garces ()
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Thi Xuan Dung Nguyen: CERAG - Centre d'études et de recherches appliquées à la gestion - UGA - Université Grenoble Alpes
Radu Burlacu: CERAG - Centre d'études et de recherches appliquées à la gestion - UGA - Université Grenoble Alpes
Sonia Jimenez-Garces: CERAG - Centre d'études et de recherches appliquées à la gestion - UGA - Université Grenoble Alpes

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Abstract: This paper studies the impact of the firm's stock price informativeness on the stock's liquidity improvement after seasoned equity offerings (SEOs). Our sample comprises 22,107 SEOs made by European firms between 2000 and 2020 and a matched sample of firms that have not made SEOs during the same year. Using a pooled regression model with a battery of liquidity measures, we find that liquidity improves significantly post-SEO, and this improvement is positively and significantly related to the informativeness of the stock price during the pre-issue period. Our results are robust to country, size, book-to-market effects, SEO underpricing, issue size, and are not driven by persistent liquidity improvements over time. We also find that the price informativeness factor is stronger in explaining liquidity improvements around SEOs in less well-developed countries. Overall, our study proves the importance of the information factor as a determinant of the firm's stock liquidity improvement at SEOs.

Date: 2025-10-06
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Published in Bankers Markets & Investors : an academic & professional review, 2025, N° 181 (2), pp.61-77. ⟨10.54695/bmi.181.0061⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05542611

DOI: 10.54695/bmi.181.0061

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