The Marketing of Seasoned Equity Offerings

Download or read book The Marketing of Seasoned Equity Offerings written by Xiaohui Gao and published by . This book was released on 2007 with total page 72 pages. Available in PDF, EPUB and Kindle. Book excerpt: ABSTRACT: Accelerated seasoned equity offerings (SEOs), which include bought deals and accelerated bookbuilt offers, have increased dramatically in the U.S. and globally recently. Accelerated offers are cheaper than traditional fully marketed offers in terms of direct issue costs. To explain why some issuing firms choose a fully marketed offer instead of an accelerated offer, we develop a model in which marketing flattens the issuer's demand curve. Empirical analysis shows that the pre-issue elasticity of the issuing firm's demand curve and the relative offer size are important determinants of the offer method. In our analysis, the elasticity of demand at the time of issuance is endogenous.