Smart investments by smart money: Evidence from seasoned equity offerings

Gibson, S and Safieddine, A and Sonti, R (2004) Smart investments by smart money: Evidence from seasoned equity offerings. Journal of Financial Economics, 72 (3). pp. 581-604.

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We document that seasoned equity issuers experiencing the greatest increase in institutional investment around the offer date outperformed their benchmark portfolios in the year following the issue by a statistically and economically significant margin relative to those experiencing the greatest decrease. No such relationship exists for a control sample of matched non-issuers. Issuers with the greatest institutional investment are also found to have the highest ratio of sell-side analyst upgrades less downgrades to total forecasts in the two quarters following the issue. Again, no such relationship is found for matched non-issuers. We interpret our results as evidence that institutions are able to identify above-average seasoned equity offering SEO firms at the time of equity issuance and increase their holdings in these potential outperformers.

Affiliation: Indian School of Business
ISB Creators:
ISB CreatorsORCiD
Sonti, R
Item Type: Article
Additional Information: The research paper was published by the author with the affiliation of Tulane University.
Uncontrolled Keywords: Institutional Investors; Seasoned Equity Offerings
Depositing User: Mohan Dass
Date Deposited: 11 Jun 2019 10:24
Last Modified: 11 Jun 2019 10:26
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