Long-run performance and insider trading in completed and canceled seasoned equity offerings

Jonathan Clarke, Craig Dunbar, Kathleen M Kahle

Research output: Contribution to journalArticle

64 Citations (Scopus)

Abstract

This paper provides evidence on managerial motives for raising equity by examining long-run performance and insider trading around canceled and completed seasoned equity offerings (SEOs). Insider selling increases prior to completed and canceled SEOs, but declines afterward only for canceled offerings. For completed SEOs, pre-filing insider trading is related to long-run performance after completion. For canceled SEOs, pre-filing insider trading is related to stock performance between filing and cancellation. Finally, changes in insider trading around SEO filing affect the probability of cancellation. Overall, the evidence is consistent with insiders exploiting windows of opportunity by attempting to issue overvalued equity and by canceling the issue when the market reaction to the announcement eliminates the overvaluation.

Original languageEnglish (US)
Pages (from-to)415-430
Number of pages16
JournalJournal of Financial and Quantitative Analysis
Volume36
Issue number4
StatePublished - Dec 2001
Externally publishedYes

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Long-run performance
Seasoned equity offerings
Insider trading
Cancellation
Insider
Overvaluation
Market reaction
Equity issues
Stock performance
Equity
Announcement

ASJC Scopus subject areas

  • Accounting
  • Economics and Econometrics
  • Finance

Cite this

Long-run performance and insider trading in completed and canceled seasoned equity offerings. / Clarke, Jonathan; Dunbar, Craig; Kahle, Kathleen M.

In: Journal of Financial and Quantitative Analysis, Vol. 36, No. 4, 12.2001, p. 415-430.

Research output: Contribution to journalArticle

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