Policy uncertainty and seasoned equity offerings methods

Dang, M., Puwanenthiren, P., Thai, H., Mazur, M., Jones, E. and Xuan Vinh, V. 2021. Policy uncertainty and seasoned equity offerings methods. International Review of Financial Analysis. 77 101830. https://doi.org/10.1016/j.irfa.2021.101830

TitlePolicy uncertainty and seasoned equity offerings methods
TypeJournal article
AuthorsDang, M., Puwanenthiren, P., Thai, H., Mazur, M., Jones, E. and Xuan Vinh, V.
Abstract

Based on a sample of U.S. seasoned equity offering (SEO) during the period 2002–2017, we examine how the choice of equity issuance method changes in response to policy uncertainty. We find that firms subject to high policy uncertainty are less likely to use accelerated offerings rather than other types of traditional seasoned equity offerings. Our results are robust to alternative variable specifications, propensity score matching method, IV approach, and the inclusion of additional controls. Also, the effect of policy uncertainty on accelerated offering decision is weaker for firms with better information environment, earnings quality, and governance structures. Further, policy uncertainty increases the cost of funds and lowers long-run abnormal returns after SEOs for firms subject to high levels of policy uncertainty.

KeywordsSeasoned equity offerings
Policy uncertainty
Multinomial logistic regression
IV approach
Article number101830
JournalInternational Review of Financial Analysis
Journal citation77
ISSN1057-5219
Year2021
PublisherElsevier
Accepted author manuscript
License
CC BY-NC-ND 4.0
File Access Level
Open (open metadata and files)
Digital Object Identifier (DOI)https://doi.org/10.1016/j.irfa.2021.101830
Publication dates
Published online25 Jun 2021

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Under embargo until 25 Dec 2022
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