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Article: The marketing of seasoned equity offerings

TitleThe marketing of seasoned equity offerings
Authors
KeywordsBookbuilding
Follow-on offerings
Marketing of securities
Seasoned equity offerings
Issue Date2010
PublisherElsevier BV. The Journal's web site is located at http://www.elsevier.com/locate/jfec
Citation
Journal Of Financial Economics, 2010, v. 97 n. 1, p. 33-52 How to Cite?
AbstractIn an accelerated seasoned equity offering (SEO), an issuer foregoes the investment bank's marketing efforts in return for a lower fee. To explain why many issuing firms choose a higher cost fully marketed offer, we posit that the marketing effort flattens the issuer's short-run demand curve. Alternatively stated, with a fully marketed offer, the issuer is paying investment bankers to create demand, making the elasticity of demand at the time of issuance an endogenous choice variable. Empirical analysis shows that both the pre-issue elasticity of the issuing firm's demand curve and the offer size are important determinants of the offer method choice. We find evidence of a large transitory increase in the elasticity of demand for issuers conducting fully marketed SEOs. © 2010 Elsevier B.V.
Persistent Identifierhttp://hdl.handle.net/10722/125566
ISSN
2015 Impact Factor: 3.541
2015 SCImago Journal Rankings: 9.920
ISI Accession Number ID
References

 

DC FieldValueLanguage
dc.contributor.authorGao, Xen_HK
dc.contributor.authorRitter, JRen_HK
dc.date.accessioned2010-10-31T11:38:42Z-
dc.date.available2010-10-31T11:38:42Z-
dc.date.issued2010en_HK
dc.identifier.citationJournal Of Financial Economics, 2010, v. 97 n. 1, p. 33-52en_HK
dc.identifier.issn0304-405Xen_HK
dc.identifier.urihttp://hdl.handle.net/10722/125566-
dc.description.abstractIn an accelerated seasoned equity offering (SEO), an issuer foregoes the investment bank's marketing efforts in return for a lower fee. To explain why many issuing firms choose a higher cost fully marketed offer, we posit that the marketing effort flattens the issuer's short-run demand curve. Alternatively stated, with a fully marketed offer, the issuer is paying investment bankers to create demand, making the elasticity of demand at the time of issuance an endogenous choice variable. Empirical analysis shows that both the pre-issue elasticity of the issuing firm's demand curve and the offer size are important determinants of the offer method choice. We find evidence of a large transitory increase in the elasticity of demand for issuers conducting fully marketed SEOs. © 2010 Elsevier B.V.en_HK
dc.languageengen_HK
dc.publisherElsevier BV. The Journal's web site is located at http://www.elsevier.com/locate/jfecen_HK
dc.relation.ispartofJournal of Financial Economicsen_HK
dc.rightsNOTICE: this is the author’s version of a work that was accepted for publication in Journal of Financial Economics. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in PUBLICATION, [v. 97, n. 1, 2010] DOI: 10.1016/j.jfineco.2010.03.007-
dc.rightsCreative Commons: Attribution 3.0 Hong Kong License-
dc.subjectBookbuildingen_HK
dc.subjectFollow-on offeringsen_HK
dc.subjectMarketing of securitiesen_HK
dc.subjectSeasoned equity offeringsen_HK
dc.titleThe marketing of seasoned equity offeringsen_HK
dc.typeArticleen_HK
dc.identifier.emailGao, X: xiaohui@hku.hken_HK
dc.identifier.authorityGao, X=rp01062en_HK
dc.description.naturepostprint-
dc.identifier.doi10.1016/j.jfineco.2010.03.007en_HK
dc.identifier.scopuseid_2-s2.0-77952674937en_HK
dc.identifier.hkuros164568en_HK
dc.identifier.hkuros172179-
dc.relation.referenceshttp://www.scopus.com/mlt/select.url?eid=2-s2.0-77952674937&selection=ref&src=s&origin=recordpageen_HK
dc.identifier.volume97en_HK
dc.identifier.issue1en_HK
dc.identifier.spage33en_HK
dc.identifier.epage52en_HK
dc.identifier.isiWOS:000277944300003-
dc.publisher.placeNetherlandsen_HK
dc.identifier.scopusauthoridGao, X=55367298000en_HK
dc.identifier.scopusauthoridRitter, JR=7402315055en_HK
dc.identifier.citeulike6870829-

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