Windows of opportunity and seasoned equity offerings: An Empirical study

What is it about?

Seasoned equity offering (SEO) is a method of raising equity capital by issuing shares to the public, usually at a price below the prevailing market price, by firms already listed on the stock exchanges. In India, it is called Follow-on Public Offerings (FPOs). It is common that when companies go public through initial public offerings (IPOs), shares issued through these IPOs generally experience two kinds of anomalies— underpricing and long-run underperformance. If the price quoted on the listing day, especially the closing price, is significantly higher than the issue price, it is called underpricing. Similarly, if the long-run return with listing day closing price as the base is negative, it is called underperformance. In this study, we examine the presence of windows of opportunity for SEOs taking a sample of 162 SEOs announced by firms listed on Bombay Stock Exchange (BSE), India, during the years 1992 to 2012.

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Photo by AbsolutVision on Unsplash

Photo by AbsolutVision on Unsplash

Why is it important?

To the best of our knowledge, this is the FIRST RESEARCH on pricing of Seasoned Equity Offerings (SEOs ) in India.

Perspectives