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Long‐horizon seasoned equity offerings performance in Pacific Rim markets
Author(s) -
Mathew Prem G
Publication year - 2002
Publication title -
review of financial economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.347
H-Index - 41
eISSN - 1873-5924
pISSN - 1058-3300
DOI - 10.1016/s1058-3300(02)00043-5
Subject(s) - equity (law) , business , monetary economics , information asymmetry , financial economics , financial system , economics , finance , political science , law
Previous studies of firms that issue seasoned equity in the US and Japan have found that these firms significantly underperform over the long‐run subsequent to the issue. I offer further evidence of this by examining Japanese seasoned offerings (SEOs) from 1975 to 1992. I find similar results for firms issuing seasoned equity in Hong Kong. However, I also find that Korean SEOs generate insignificant abnormal returns over a 36‐month period following the issue. These results suggest that the asymmetric information argument offered for the US and Japanese markets do not always hold, especially in markets where the regulatory and market structures vary greatly. Cross‐sectional results suggest that younger firms tend to perform worse than older firms.