TY - JOUR
T1 - Market timing of seasoned equity offerings with long regulative process
AU - Huang, Yong
AU - Uchida, Konari
AU - Zha, Daolin
N1 - Funding Information:
An early version of this paper was presented at the Midwest Finance association, 11th International Conference on Asian Financial Markets and Developments, and seminars at the Capital University of Economics and Business, Beijing Wuzi University, and Kyushu University. We would like to thank Yasuhiro Arikawa, Jeffrey Coles, Liping Dong, Jon Garfinkel, Nobuaki Hori, Jianlei Liu, Hideaki Miyajima, Minoru Otsubo, Hideo Owan, Quian Sun, and Qie Yin for their helpful comments and suggestions. This research has been financially supported by JSPS KAKENHI Grant Number 15H03367 and JSPS Core-to-Core Program , A. Advanced Research Networks .
Publisher Copyright:
© 2016 Elsevier B.V.
PY - 2016/8/1
Y1 - 2016/8/1
N2 - A long regulative process exists between the initial announcement and execution of seasoned equity offerings (SEOs) in China. Although the initial announcement of an SEO is associated with a significant reduction in the stock price, the regulator (China Securities Regulatory Commission) finally approves it after a significant run up in the price of the stock. Chinese managers execute SEOs after additional stock price increases. As a result, the stock price at issuance is not significantly different from the price on announcement, and is significantly higher than the price three months before the announcement. We also find stock prices decline following the execution. These results suggest that regulative screenings for market stabilization are beneficial for SEO market timing, and that Chinese managers successfully time the market, even with a prolonged regulative process.
AB - A long regulative process exists between the initial announcement and execution of seasoned equity offerings (SEOs) in China. Although the initial announcement of an SEO is associated with a significant reduction in the stock price, the regulator (China Securities Regulatory Commission) finally approves it after a significant run up in the price of the stock. Chinese managers execute SEOs after additional stock price increases. As a result, the stock price at issuance is not significantly different from the price on announcement, and is significantly higher than the price three months before the announcement. We also find stock prices decline following the execution. These results suggest that regulative screenings for market stabilization are beneficial for SEO market timing, and that Chinese managers successfully time the market, even with a prolonged regulative process.
UR - http://www.scopus.com/inward/record.url?scp=84971654923&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=84971654923&partnerID=8YFLogxK
U2 - 10.1016/j.jcorpfin.2016.05.001
DO - 10.1016/j.jcorpfin.2016.05.001
M3 - Article
AN - SCOPUS:84971654923
SN - 0929-1199
VL - 39
SP - 278
EP - 294
JO - Journal of Corporate Finance
JF - Journal of Corporate Finance
ER -