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

Bilinski, P. & Strong, N. (2013). Managers' private information, investor underreaction and long-run SEO performance. European Financial Management, 19(5), pp. 956-990. doi: 10.1111/j.1468-036X.2011.00616.x

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Abstract

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: Article
Additional Information: This is the accepted version of the following article: Bilinski, P. & Strong, N. (2013). Managers' private information, investor underreaction and long-run SEO performance. European Financial Management, 19(5), pp. 956-990 which has been published in final form at doi: 10.1111/j.1468-036X.2011.00616.x <http://dx.doi.org/10.1111/j.1468-036X.2011.00616.x>
Uncontrolled Keywords: managerial private information, investor underreaction, seasoned equity issues, long-run performance
Subjects: H Social Sciences > HG Finance
Divisions: Cass Business School > Faculty of Finance
URI: http://openaccess.city.ac.uk/id/eprint/7558

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