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.|