Seasoned common stock issuance following an IPO

Myron B. Slovin; Marie Sushka; Yvette M. Bendeck

doi:10.1016/0378-4266(94)00087-5

Seasoned common stock issuance following an IPO

Myron B. Slovin, Marie Sushka, Yvette M. Bendeck

WPC: Finance

Research output: Contribution to journal › Article › peer-review

20 Scopus citations

Abstract

We examine valuation effects of a NASDAQ firm's first seasoned common stock issue after its initial public offering on NASDAQ and analyze how share-price response is affected by characteristics of the firm and its IPO. First seasoned issues have excess returns of -2.9%, occur after periods of sharply rising stock market prices, and have large positive cumulative excess returns prior to announcement. We find IPO underpricing mitigates share-price response to seasoned offerings as predicted by Welch's (1989) model of the IPO market. Returns are also inversely related to the proportion of firm shares sold by insiders as part of the seasoned offering.

Original language	English (US)
Pages (from-to)	207-226
Number of pages	20
Journal	Journal of Banking and Finance
Volume	18
Issue number	1
DOIs	https://doi.org/10.1016/0378-4266(94)00087-5
State	Published - Jan 1994

Keywords

IPO
Seasonal stock issuances
Underpricing

ASJC Scopus subject areas

Finance
Economics and Econometrics

Access to Document

10.1016/0378-4266(94)00087-5

Cite this

@article{6ef6690bf13549dfbb88db4d2a0441cb,

title = "Seasoned common stock issuance following an IPO",

abstract = "We examine valuation effects of a NASDAQ firm's first seasoned common stock issue after its initial public offering on NASDAQ and analyze how share-price response is affected by characteristics of the firm and its IPO. First seasoned issues have excess returns of -2.9%, occur after periods of sharply rising stock market prices, and have large positive cumulative excess returns prior to announcement. We find IPO underpricing mitigates share-price response to seasoned offerings as predicted by Welch's (1989) model of the IPO market. Returns are also inversely related to the proportion of firm shares sold by insiders as part of the seasoned offering.",

keywords = "IPO, Seasonal stock issuances, Underpricing",

author = "Slovin, {Myron B.} and Marie Sushka and Bendeck, {Yvette M.}",

year = "1994",

month = jan,

doi = "10.1016/0378-4266(94)00087-5",

language = "English (US)",

volume = "18",

pages = "207--226",

journal = "Journal of Banking and Finance",

issn = "0378-4266",

publisher = "Elsevier",

number = "1",

}

TY - JOUR

T1 - Seasoned common stock issuance following an IPO

AU - Slovin, Myron B.

AU - Sushka, Marie

AU - Bendeck, Yvette M.

PY - 1994/1

Y1 - 1994/1

N2 - We examine valuation effects of a NASDAQ firm's first seasoned common stock issue after its initial public offering on NASDAQ and analyze how share-price response is affected by characteristics of the firm and its IPO. First seasoned issues have excess returns of -2.9%, occur after periods of sharply rising stock market prices, and have large positive cumulative excess returns prior to announcement. We find IPO underpricing mitigates share-price response to seasoned offerings as predicted by Welch's (1989) model of the IPO market. Returns are also inversely related to the proportion of firm shares sold by insiders as part of the seasoned offering.

AB - We examine valuation effects of a NASDAQ firm's first seasoned common stock issue after its initial public offering on NASDAQ and analyze how share-price response is affected by characteristics of the firm and its IPO. First seasoned issues have excess returns of -2.9%, occur after periods of sharply rising stock market prices, and have large positive cumulative excess returns prior to announcement. We find IPO underpricing mitigates share-price response to seasoned offerings as predicted by Welch's (1989) model of the IPO market. Returns are also inversely related to the proportion of firm shares sold by insiders as part of the seasoned offering.

KW - IPO

KW - Seasonal stock issuances

KW - Underpricing

UR - http://www.scopus.com/inward/record.url?scp=38149145476&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=38149145476&partnerID=8YFLogxK

U2 - 10.1016/0378-4266(94)00087-5

DO - 10.1016/0378-4266(94)00087-5

M3 - Article

AN - SCOPUS:38149145476

VL - 18

SP - 207

EP - 226

JO - Journal of Banking and Finance

JF - Journal of Banking and Finance

SN - 0378-4266

IS - 1

ER -

Seasoned common stock issuance following an IPO

Abstract

Keywords

ASJC Scopus subject areas

Access to Document

Other files and links

Fingerprint

Cite this