Ownership structure and choice of issue method in seasoned equity offerings - European evidence

摘要

PURPOSE OF THE STUDYThe purpose of the thesis is to provide new evidence on seasoned equity offerings (SEOs) in Europe. The thesis addresses the lack of empirical research on different public issue types, in particular the distinction between fully marketed offerings and accelerated offers, in addition to studying ownership characteristics. More specifically, new evidence is provided on the influence of the issue method, institutional ownership, and ownership concentration on the offer price discount, announcement effect, and long-run post-issue returns; and to whether ownership characteristics affect the choice of issue method. DATAThe data on SEOs employed in the thesis is sourced from the Dealogic database, which provides the needed classification for the issue type absent in the SDC database. The sample consists of SEOs carried out in Europe during the period 2000-2005, with the total number of SEOs amounting to 364. The data on ownership characteristics consists of pre and post-issue institutional holding and ownership concentration, and has been manually handpicked from Thomson Financial. Data on various firm characteristics is sourced from Thomson Financial and Dealogic, while stock prices and market indices are retrieved from Datastream.RESULTSThe results indicate that SEOs which are carried out by a fully marketed process suffer to a lesser extent from the offer price discount than SEOs which are carried out by an accelerated process. On the other hand, ownership characteristics do not seem to affect the offer price discount. The announcement effect is not affected by the issue method or ownership characteristics. Additionally, high ownership concentration is negatively associated with 24 and 36-month post-issue returns. High institutional holding is positively associated with 24-month post-issue returns – however this result is not observable for 36-month returns. The issue method does not seem to affect post-issue returns. Finally, SEOs which are characterized by high pre-issue institutional ownership and low pre-issue ownership concentration are likely to be carried out by an accelerated process.