An Analysis of Closed-End Fund Seasoned Equity Offerings.

We examine the stock price reaction to seasoned equity offerings (SEOs) of closed-end funds and the determinants of the issuance decision. We find that sample funds have negative and significant average announcement-day returns that are less than the returns associated with industrial firm SEOs, most likely because funds have fewer information asymmetries. Issuing funds have higher pre-issue returns, higher premiums, lower betas, and lower three-year, post-issue returns than nonissuing funds. The results of the study are consistent with the argument that fund managers time issues to take advantage of mean reversion in fund returns.

Main Author: Higgins, Eric James.
Other Authors: Howton, Shawn., Howton, Shelly.
Format: Villanova Faculty Authorship
Language: English
Published: 2003
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