IPOs and SEOs real investments and market timing: emerging market evidence

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dc.contributor.authorWadhwa, K.
dc.contributor.authorReddy, V. N.
dc.contributor.authorGoyal, A.
dc.contributor.authorMohamed, Abdulkadir
dc.date.accessioned2016-11-25T09:56:18Z
dc.date.available2016-11-25T09:56:18Z
dc.date.issued2016-05-30
dc.description.abstractThis 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_UK
dc.identifier.citationWadhwa K, Reddy VN, Goyal A, Mohamed A, IPOs and SEOs real investments and market timing: emerging market evidence, Journal of International Financial Markets, Institutions and Money, Volume 45, November 2016, Pages 21-41en_UK
dc.identifier.issn1042-4431
dc.identifier.urihttp://dx.doi.org/10.1016/j.intfin.2016.05.007
dc.identifier.urihttp://dspace.lib.cranfield.ac.uk/handle/1826/11026
dc.language.isoenen_UK
dc.publisherElsevieren_UK
dc.rightsAttribution-NonCommercial-NoDerivatives 4.0 International
dc.rights.urihttp://creativecommons.org/licenses/by-nc-nd/4.0/
dc.subjectIPOsen_UK
dc.subjectSEOsen_UK
dc.subjectMarket-timingen_UK
dc.subjectInvestment fundingen_UK
dc.subjectMarket-to-book ratioen_UK
dc.subjectResidual income modelen_UK
dc.subjectLong-run performanceen_UK
dc.titleIPOs and SEOs real investments and market timing: emerging market evidenceen_UK
dc.typeArticleen_UK

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