IPOs and SEOs, real investments, and market timing: Emerging market evidence

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dc.contributor.author Wadhwa, Kavita
dc.contributor.author Nagi Reddy, V.
dc.contributor.author Goyal, Abhinav
dc.contributor.author Mohamed, Abdulkadir
dc.date.accessioned 2020-01-22T14:57:55Z
dc.date.available 2020-01-22T14:57:55Z
dc.date.issued 2016-05-30
dc.identifier.citation Wadhwa, K., Nagi Reddy, V., Goyal, A. and Mohamed, A. (2016) 'IPOs and SEOs, real investments, and market timing: Emerging market evidence', Journal of International Financial Markets, Institutions and Money, 45, pp. 21-41. doi: 10.1016/j.intfin.2016.05.007 en
dc.identifier.volume 45 en
dc.identifier.startpage 21 en
dc.identifier.endpage 41 en
dc.identifier.issn 1042-4431
dc.identifier.uri http://hdl.handle.net/10468/9557
dc.identifier.doi 10.1016/j.intfin.2016.05.007 en
dc.description.abstract This study uses market-to-book ratio decomposition to examine whether firms that issue equity through initial public offerings or seasoned equity offerings exploit mispricing because of investor enthusiasm or to finance growth opportunities. We find strong evidence that, on average, firms do not issue mispriced stocks to exploit investors but, rather, to finance their investment opportunities in the form of real assets, inventory, and capital expenses. Firms that issue overvalued stocks with the view to increase their cash holdings experience poor long-run performance. Overall, our results show that stock mispricing drives equity offerings through IPOs and SEOs. Nonetheless, high transparency and balanced regulation in the marketplace deter issuing firms from investing their proceeds in non-value-creating activities. This evidence is robust to alternative measures of valuation and long-run performance. en
dc.format.mimetype application/pdf en
dc.language.iso en en
dc.publisher Elsevier en
dc.relation.uri http://www.sciencedirect.com/science/article/pii/S1042443116300464
dc.rights © 2016 Elsevier B.V. All rights reserved. This manuscript version is made available under the CC BY-NC-ND 4.0 licence. en
dc.rights.uri https://creativecommons.org/licenses/by-nc-nd/4.0/ en
dc.subject Investment funding en
dc.subject IPOs en
dc.subject Long-run performance en
dc.subject Market-timing en
dc.subject Market-to-book ratio en
dc.subject Residual income model en
dc.subject SEOs en
dc.title IPOs and SEOs, real investments, and market timing: Emerging market evidence en
dc.type Article (peer-reviewed) en
dc.internal.authorcontactother Abhinav Goyal, Cork University Business School, University College Cork, Cork, Ireland. +353-21-490-3000 Email: abhinav.goyal@ucc.ie en
dc.internal.availability Full text available en
dc.date.updated 2020-01-22T14:40:35Z
dc.description.version Accepted Version en
dc.internal.rssid 500175776
dc.description.status Peer reviewed en
dc.identifier.journaltitle Journal of International Financial Markets Institutions & Money en
dc.internal.copyrightchecked Yes
dc.internal.licenseacceptance Yes en
dc.internal.IRISemailaddress abhinav.goyal@ucc.ie en


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© 2016 Elsevier B.V. All rights reserved. This manuscript version is made available under the CC BY-NC-ND 4.0 licence. Except where otherwise noted, this item's license is described as © 2016 Elsevier B.V. All rights reserved. This manuscript version is made available under the CC BY-NC-ND 4.0 licence.
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