The performance of Chinese seasoned equity offerings after equity division reform

摘要

The performance of seasoned equity offerings has long attracted the attention of scholars and practitioners at home and abroad. Previous research generally supports the “long-term underperformance” effect and has proposed some theoretical explanations. This study investigates the performance after seasoned equity offerings (SEO) employing description statistics methodology and using a sample of new stock issue for the period 2006–2008. Results demonstrate that performance declined in the first year after SEO but soon revived and witnessed an improvement. The drop and rise phenomenon puts forward a chance that the significant “long-term underperformance” effect of seasoned equity offerings after equity division reform may not perfectly work in China. Furthermore, five factors (e.g., earnings management, ownership concentration etc.) influencing performance of seasoned equity offerings are identified with the multi linear regression method. Future research opportunities and implications for practice are also discussed.