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Order Flow Patterns around Seasoned Equity Offerings and their Implications for Stock Price Movements *
Author(s) -
HUH SAHNWOOK,
SUBRAHMANYAM AVANIDHAR
Publication year - 2005
Publication title -
international review of finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.489
H-Index - 18
eISSN - 1468-2443
pISSN - 1369-412X
DOI - 10.1111/j.1468-2443.2006.00052.x
Subject(s) - equity (law) , portfolio , liberian dollar , business , stock (firearms) , order (exchange) , monetary economics , stock price , financial economics , economics , finance , mechanical engineering , political science , law , engineering , paleontology , series (stratigraphy) , biology
In this study, we employ order imbalance measures to provide evidence that there is cross‐sectional heterogeneity in investor reactions to seasoned equity offerings (SEOs). The normally positive relation between imbalances and returns disappears for trade number imbalances but remains intact for dollar imbalances following SEOs. The return‐imbalance delinkage is most pronounced for SEO stocks in which institutions (non‐institutions) are net sellers (buyers). We also find that the SEO portfolio in which large institutional investors are net sellers strongly underperforms the complementary portfolio in which they are net buyers.