The Puzzling Increase in the Underpricing of Seasoned Equity Offerings

摘要: Using a sample of over 3,000 seasoned equity offerings (SEOs) from 1983 to 1998, we test the hypothesis that U.S. Securities and Exchange Commission's Rule 10b-21, which disallows covering short positions with newly issued SEOs, makes pre-offer stock prices less informative, which, in turn, causes new be priced at discount. Consistent hypothesis, find year rule went into effect coincides begin observing significant SEO discounts. Further, ex ante uncertainty discounts are positively related. We also conduct tests specifically related selling, consider an exhaustive set alternative explanations for Based on all evidence, conclude it is issue larger 1990s.