Title

SEO announcement returns and internal capital market efficiency

Authors

Authors

A. Akhigbe;A. M. Whyte

Comments

Authors: contact us about adding a copy of your work at STARS@ucf.edu

Abbreviated Journal Title

J. Corp. Financ.

Keywords

Seasoned equity offerings; Internal capital market efficiency; Diversified firms; Multiple segment firms; Follow-on offerings; SEASONED EQUITY OFFERINGS; CORPORATE DIVERSIFICATION; PRICE DYNAMICS; FIRMS; INFORMATION; INVESTMENT; EVENT; STOCK; PERFORMANCE; ISSUES; Business, Finance

Abstract

We test the hypothesis that efficient internal capital markets mitigate the negative announcement returns surrounding seasoned equity offerings (SEOs). Our predictions are based on the argument that efficiency reduces uncertainty regarding the value of assets-in-place. Having established the inverse association between our efficiency measures and uncertainty, we show that the efficiency measures are positively associated with SEO announcement returns, particularly among firms with multiple segment codes. The positive relation suggests that efficiency mitigates uncertainty regarding the value of assets-in-place, and this is the channel through which more favorable announcement returns are produced in response to the SEOs of high efficiency firms. (C) 2015 Elsevier B.V. All rights reserved.

Journal Title

Journal of Corporate Finance

Volume

31

Publication Date

1-1-2015

Document Type

Article

Language

English

First Page

271

Last Page

283

WOS Identifier

WOS:000353602400015

ISSN

0929-1199

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