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SEOs: Friendly or threatening game for rivals?

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  • Boucher, Carène
  • Kooli, Maher

Abstract

We examine the effects of large seasoned equity offerings (SEOs) on industry rivals. We provide evidence that rivals react positively to completed SEOs in their industry and negatively to SEO withdrawals. These short-term SEO effects are stronger in the case of primary offerings than in the case of secondary offerings. Rivals also appear to experience improvements in their long-run financial and operating performances. Further, we find that the likelihood of rivals’ survival is greater subsequent to primary issues than secondary ones. Overall, our results are consistent with the information effects hypothesis. Thus, large SEOs convey favorable information regarding the prospects of an industry.

Suggested Citation

  • Boucher, Carène & Kooli, Maher, 2021. "SEOs: Friendly or threatening game for rivals?," International Review of Economics & Finance, Elsevier, vol. 75(C), pages 130-144.
    • Handle: RePEc:eee:reveco:v:75:y:2021:i:c:p:130-144
    DOI: 10.1016/j.iref.2021.04.004
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    More about this item

    Keywords

    Seasoned equity offerings; Rivals; Competitive effects; Information effects; Withdrawal;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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