The Effect of Investor Attention on the Pricing of Seasoned Equity Offerings

Download or read book The Effect of Investor Attention on the Pricing of Seasoned Equity Offerings written by Cristian A. Pinto-Gutierrez and published by . This book was released on 2015 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: I examine the role of investor attention on seasoned equity offerings' (SEOs) outcomes. I use an archive of Thomson Reuters' news articles and third-party newswires to proxy for investor attention. I find that the volumes of news articles prior to the offerings are positively associated with the offer price discounts of SEOs. Furthermore, the volumes of news articles are negatively associated with the cumulative abnormal returns three days around the SEOs. I conclude that the costs of equity increase with the frequency of news stories prior to SEOs. Overall, the evidence is consistent with the hypothesis that investor attention contributes to the efficiency of the stock market and affects investors' information processing in SEOs.