The Impact of Corporate Transparency on Seasoned Equity Offerings

摘要

I examine the impact of corporate transparency on seasoned equity offerings (SEOs) by inspecting the firm characteristics, price performance prior to SEO announcements, market reactions to announcements, and long-term performance post issuance. All results are consistent with the information price discount hypothesis. A higher information risk can increase required returns and reduce stock prices. Even though I find that low transparency firms have more positive stock performance prior to SEO announcements, the price increase on average is not significant enough to completely eliminate the information discount. In the long run, SEOs issued by high transparency firms un-derperform those issued by low transparency firms, showing that high transparency firms are more successful at issuing overvalued stocks. Therefore, managers who plan to issue SEOs in the future should increase disclosure to reduce information asymmetry and the attached price discount.