Market timing, market conditions and seasoned equity offerings-some evidences from an emerging country

摘要

By testing the market timing and market conditions hypotheses, the present study investigated the drive of conducting seasoned equity offerings (SEOs) of TAIEX-listed companies. The result evidenced that firms with the higher ratio of market value to book value tended to issue SEOs (that is, utilization of overpricing). They have been less caring for change in market conditions (for example expected market returns, expected aggregate profitability, or prior uncertainty). It showed that a firm paid more attention to past and immediate market returns rather than expected market situations. Accordingly, our finding was in agreement with the market timing hypothesis rather than the market conditions hypothesis. The implication was that, in the short term, the stock price would have a possibility of adjusting downward right after SEOs issues. It was suggested that investors might reduce the holding equities of firms with issuing SEOs.