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Investor Sentiment and Seasoned Equity Offerings

Emir Hrnjić, National University of Singapore

26th Apr 2012  11:30 am - 12:30 pm 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.