Managers’ private information, investor underreaction and long-run SEO performance

Bilinski, Pawel and Strong, Norman (2013) Managers’ private information, investor underreaction and long-run SEO performance. European Financial Management, 19 (5). pp. 956-990. ISSN 1354-7798

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For a sample of 2,879 SEOs by US stocks from 1970 to 2004, this paper decomposes an average three-year post-issue buy-and-hold abnormal return of −25.9% (relative to size- and B/M-matched non-issuing stocks) into two components. One component, representing 41% of the total, is due to lower risk exposure. The second component, representing the remaining 59%, is abnormal performance related to the surprise element of the issue decision, which the paper attributes to managers’ private information that the market does not incorporate into the announcement return. This second component results in abnormal returns during the 16 months after the offering.

Item Type:
Journal Article
Journal or Publication Title:
European Financial Management
Additional Information:
This is a pre-print of an article published in European Financial Management 19 (5), 2013. (c) Wiley-Blackwell
Uncontrolled Keywords:
?? managerial private informationinvestor underreactionseasoned equity issueslong-run performanceeconomics, econometrics and finance(all)accounting ??
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Deposited On:
03 Oct 2011 12:47
Last Modified:
15 Jul 2024 12:22