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Do share offerings increase payouts?

Author

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  • Boulifa, Hichem
  • Uchida, Konari

Abstract

This paper investigates the effects of pure secondary share offerings, which decrease ownership concentration without raising funds, to highlight the corporate governance effect of equity offerings. We find that firms conducting secondary offerings significantly increase dividend payouts after the transaction. Although the announcement of secondary offerings receives negative stock price reactions in the short run, we witness a reversal and positive performance in the long term. While previous studies commonly suggest equity offerings cause negative stock returns, our results reveal that these transactions make managers care about minority shareholder wealth by unwinding ownership concentration.

Suggested Citation

  • Boulifa, Hichem & Uchida, Konari, 2024. "Do share offerings increase payouts?," Pacific-Basin Finance Journal, Elsevier, vol. 85(C).
    • Handle: RePEc:eee:pacfin:v:85:y:2024:i:c:s0927538x24000982
    DOI: 10.1016/j.pacfin.2024.102347
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