Investor Sentiment and the SEO Pricing Process

Download or read book Investor Sentiment and the SEO Pricing Process written by Xiaoying Deng and published by . This book was released on 2018 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Using real estate investment trusts as a unique laboratory, we investigate the impact of investor sentiment on seasoned equity offering (SEO) price dynamics. Evidence indicates that investor sentiment is positively related to pre-SEO overpricing and probability of issuance. SEOs issued in high sentiment periods have larger discounts and higher first day returns. We also find that high sentiment periods are followed by low long-run returns, suggesting that sentiment does not proxy for unobservable fundamentals. Overall, our findings are consistent with market timing and behavioral explanations for equity offerings.