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Evidence of Selling by Managers after Seasoned Equity Offering Announcements

Author

Listed:
  • Michael Gombola
  • Hei Wai Lee
  • Feng-Ying Liu

Abstract

Significant insider selling continues after a seasoned equity offering (SEO) is announced. This finding is consistent with earlier studies that equity offerings are undertaken by companies whose stock is overpriced. The study also suggests that the stock of firms that employ SEOs stays overpriced for several months after the offering.

Suggested Citation

  • Michael Gombola & Hei Wai Lee & Feng-Ying Liu, 1997. "Evidence of Selling by Managers after Seasoned Equity Offering Announcements," Financial Management, Financial Management Association, vol. 26(3), Fall.
    • Handle: RePEc:fma:fmanag:gombola97
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    Citations

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    Cited by:

    1. Ciner, Cetin & Karagozoglu, Ahmet K., 2008. "Information asymmetry, speculation and foreign trading activity: Emerging market evidence," International Review of Financial Analysis, Elsevier, vol. 17(4), pages 664-680, September.
    2. Louis T. W. Cheng & T. Y. Leung, 2008. "Is there information content from insider trading activities preceding earnings and dividend announcements in Hong Kong?," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 48(3), pages 417-437, September.
    3. Asjeet S. Lamba & Walayet A. Khan, 1999. "Exchange Listings And Delistings: The Role Of Insider Information And Insider Trading," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 22(2), pages 131-146, June.
    4. Sinan Gokkaya & Michael J. Highfield, 2014. "Sales of Secondary Shares in SEOs: A Comparison across Top Managers, Other Insiders, and Outsiders," Financial Management, Financial Management Association International, vol. 43(4), pages 757-794, December.
    5. Ching-Chih Wu & Tung-Hsiao Yang, 2018. "Insider Trading and Institutional Holdings in Seasoned Equity Offerings," JRFM, MDPI, vol. 11(3), pages 1-14, September.
    6. Krishnan, C.N.V. & Ergungor, O. Emre & Laux, Paul A. & Singh, Ajai K. & Zebedee, Allan A., 2010. "Examining bank SEOs: Are offers made by undercapitalized banks different?," Journal of Financial Intermediation, Elsevier, vol. 19(2), pages 207-234, April.
    7. Firth, Michael & Leung, T.Y. & Rui, Oliver M., 2010. "Double signals or single signal? An investigation of insider trading around share repurchases," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 20(4), pages 376-388, October.
    8. Kahle, Kathleen M., 2000. "Insider trading and the long-run performance of new security issues," Journal of Corporate Finance, Elsevier, vol. 6(1), pages 25-53, March.
    9. Ching, Ken M.L. & Firth, Michael & Rui, Oliver M., 2006. "The information content of insider trading around seasoned equity offerings," Pacific-Basin Finance Journal, Elsevier, vol. 14(1), pages 91-117, January.

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