The Effect of Investor Attention on the Pricing of Seasoned Equity Offerings
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Date
2015-08
Type:
Documento de trabajo
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36 páginas
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School of Business and Economics, Universidad del Desarrollo
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Abstract
I examine the role of investor attention on seasoned equity offerings’ (SEOs) outcomes. I use an archive of Thomson Reuters’ news articles 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 investor attention prior to SEOs. Overall, the evidence is consistent with the hypothesis that investor attention affects investors’ information processing in SEOs
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Keywords
Investor attention, Seasoned equity offerings, News analytics, Media coverage, Investor sentiment