Previous research within seasoned equity offerings and the issuing companies’ performance on the market is plentiful. In general, most researchers agree that an issuing company can expect to generate a lower return in the years following the issuance in comparison to companies that does not feel the need to acquire equity in this way. However, something that has not been conclusively shown is whether the industry on which the issuing company operates has a significant effect on the substance of this underperformance. Therefore, the purpose of this study is to analyse whether the issuing company differs from the nonissuing company and if the industry on which they operate affects the outcome. To investigate this, an event study has been conducted based on a total of 94 issuances on three different industries. Statistical tests have been performed on the equity share data of these companies, along with three matching companies, one for each industry. The results of the study indicate that there is a certain industry-effect, however it has not been successfully proven with any real significance. What has been significantly shown, however, is that the price-to-book value of the issuing company has a significantly negative relationship with the companies’ return on equity. This means that a higher price-to-book value within the studied population has meant a lower return, and vice versa.
|Date of Award||2020-Jul-06|
|Supervisor||Emil Numminen (Supervisor), Zahida Sarwary (Examiner) & Heléne Tjärnemo (Examiner)|
- Degree of Bachelor of Science in Business and Economics
- 15 HE credits
Swedish Standard Keywords
- Business Administration (50202)