Investor Sentiment and Seasoned Equity Offerings
Emir Hrnjić, National University of Singapore
26th Apr 2012 11:30 am - Room 214/215, H69 - Economics and Business Building
We document that investor sentiment is positively related with pre-SEO overpricing and plays an important role in managers' equity issuance decisions. Further, we provide evidence that investor sentiment impacts the SEO discounting and underpricing. High sentiment periods are followed by low long run returns suggesting that sentiment does not proxy for unobservable fundamentals. Overall, our findings are consistent with market timing and behavioural explanations for equity offerings.