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The Research On Stock Price Effect Of Seasoned Equity Offerings And Its Influencing Factors

Posted on:2005-11-05Degree:MasterType:Thesis
Country:ChinaCandidate:K LiuFull Text:PDF
GTID:2156360125458666Subject:Management Science and Engineering
Abstract/Summary:PDF Full Text Request
Raising funds is one of the basic functions of security market. As the main body of the market, listed companies may want to raise money again after the initial public offerings, for the industrial development or capital operation. Thus seasoned equity offering is the best choice. Seasoned equity offerings (SEO) is defined as the behavior of raising funds again on the basis of original capital stock. In China, it has its unique advantage compared with rights issue or convertible bonds. It has developed rapidly since its initial implement on June 1998, and is becoming the most important re-funding method in Chinese security market. However, it has also brought some problem and negative effect to our stock market. Investigating the stock price effect of seasoned equity offerings is helpful in understanding and evaluating this financing method appropriately, meaningful in both realizing the short-term stock price impact of it and bettering our capital market.For the reasons mentioned above, based on the SEO price effect theory and the domestic development of SEO, this paper brings out a series of research hypothesis. Applying event study methodology in interpreting the abnormal returns both on the SEO announcement day and issuance day, measure and analyze all samples, samples from Shanghai stock market and Shenzhen stock market, respectively. The sample interval is defined as one year previous the new regulation till one year after it. On the basis of this, this paper further investigates the affected factors of SEO price effect. And we find that the offering size is directly related to the price effect, while the change in debt ratio is not significantly related to it. The fact that previous stock price seems to be overvalued confirmed the Information Hypothesis. While the duality of ownership structure also helps in explaining the stock price effect. At last, we made suggestions to government regulatory institutions, managers of listed companies and investors, according to this paper's findings.
Keywords/Search Tags:seasoned equity offerings, stock price effect, abnormal return, price pressure hypothesis, leverage hypothesis, information hypothesis, duality ownership structure
PDF Full Text Request
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