INTRA-INDUSTRY EFFECTS OF SEASONED EQUITY OFFERINGS

Abstract

How do seasoned equity offerings (SEOs) affect their industry rivals’ market and operating performances? This paper provides a comprehensive answer to that question by employing ordinary least squares (OLS) regressions and abnormal return event studies around the announcements and issuances of significant SEOs on a sample of 4,479 publicly-traded rival firms. The rivals are matched by 4-digit Standard Industrial Classification (SIC) to a sample of 2,289 U.S.-based, nonfinancial significant SEOs issued between 1990 and 2016. The event study results show that rivals’ cumulative abnormal returns decline after announcements and issuances of significant SEOs. And I find that rivals’ annual growth in assets, capital expenditures, and revenue generally increase in the longer-term with their industries’ annual SEO activity levels, which is composed of the number of significant SEOs along with their total associated primary and secondary capital.