The Empirical Study Of The Market Reaction Of Seasoned Equity Offerings In China A Share Market

Investors always pay attention to listed companies' refinancing behavior. Seasoned Equity Offering is an important refinancing way. Though it developed in China for only four years, it is preferred by more and more listed companies. Based on population of 53 listed companies in China A share market which executed seasoned equity offering from 1998 to present, this study exams the market reaction in the announcement day, issuance day and listing day of seasoned equity offering, and then study the most important influence factors of the market reaction. Then we analyze whether there is a window of opportunity for seasoned equity offering.We use the standard CAR method to study the market reaction in the announcement day, issuance day and listing day of seasoned equity offering, and classify the 53 companies into 6 groups based on the market condition to see whether there is some relationship between the market reaction of seasoned equity offering and the market condition. Then we apply correlation analysis and regression analysis to exam the most important influence factors of market reaction.Our empirical results show that generally there is negative market reaction for seasoned equity offering, but the market reaction is sometimes positive and sometimes negative for different companies. The market reaction is mainly influenced by issue volume, market value to book value and issue price to market price. This study proves that there is a window of opportunity for seasoned equity offering. The period when the market is rising and the company's market value to book value is high is the best timing for seasoned equity offering. In this kind of period, the market reaction is positive or less negative. So we suggest that CSRC should give listed companiesthe right to freely choose the best refinancing timing.