Market Feedback and Equity Issuance: Evidence from Repeat Equity Issues

摘要: Higher first-year post-issue returns are associated with a significantly higher probability of follow-on equity issuance over the next 5 years. This result holds when we control for pre-issue and other factors known to affect issuance. The is most consistent market feedback hypothesis that high return encourages managers increase firm's investment because it implies that, in market's view, marginal project high. In corporate finance, refers stock provide information, otherwise not available managers, about profitability projects. High convey belief projects high, which raise additional capital investment. Jegadeesh, Weinstein, Welch (1993) offer this explain their finding following an initial public offering (IPO) seasoned offerings (SEOs) within 3 years