Seasoned common stock issuance following an IPO

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

Research output: Contribution to journalArticle

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 languageEnglish (US)
Pages (from-to)207-226
Number of pages20
JournalJournal of Banking and Finance
Volume18
Issue number1
DOIs
StatePublished - Jan 1994

Keywords

  • IPO
  • Seasonal stock issuances
  • Underpricing

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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