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Post-SEO Performance in the Recovery Phase of the Financial Crisis

Östgren, Richard LU and Brunskog, Erik LU (2015) BUSN89 20151
Department of Business Administration
Abstract
This thesis focuses on seasoned equity offerings and aims to examine announcement effects and long-run performance of SEO firms on the Swedish stock exchanges, during the recovery phase of the global financial crisis. Also, an OLS regression is run in order to explain post-SEO performance using the independent variables book-to-market ratio, market capitalization and the firms’ number of SEOs during the time period.

The study takes on a deductive approach measuring and analyzing SEO firms’ performance, meaning that hypotheses are deduced based on earlier research and theory. Earlier studies and theory generally suggest negative announcement effects, along with long-run underperformance of firms that issue seasoned equity.

The... (More)
This thesis focuses on seasoned equity offerings and aims to examine announcement effects and long-run performance of SEO firms on the Swedish stock exchanges, during the recovery phase of the global financial crisis. Also, an OLS regression is run in order to explain post-SEO performance using the independent variables book-to-market ratio, market capitalization and the firms’ number of SEOs during the time period.

The study takes on a deductive approach measuring and analyzing SEO firms’ performance, meaning that hypotheses are deduced based on earlier research and theory. Earlier studies and theory generally suggest negative announcement effects, along with long-run underperformance of firms that issue seasoned equity.

The sample consists of Swedish firms listed on NASDAQ OMX Stockholm and First North. More specifically, the sample includes a total of 123 observations measuring announcement effects and 81 observations measuring long-run performance. The results generated by the study show clear signs of negative announcement effects and long-run underperformance for Swedish SEO firms during the time period. However, long-run underperformance cannot be concluded for SEO firms listed on First North during the time period. Moreover, the independent variable for number of SEOs is negatively significant for firms listed on NASDAQ OMX Stockholm. The results suggest that signaling theories, which say that an SEO has a negative impact on firm value, are applicable on the Swedish stock markets. Furthermore, interpreting the results hint that the markets have not been efficient in terms of initial re-evaluation of stock prices after information of SEO announcements. (Less)
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author
Östgren, Richard LU and Brunskog, Erik LU
supervisor
organization
course
BUSN89 20151
year
type
H1 - Master's Degree (One Year)
subject
keywords
Seasoned Equity Offering, SEO, Announcement Effects, Long-Run Performance, Event Study, Cumulative Abnormal Return, Market Efficiency, Swedish Stock Markets.
language
English
id
7471645
date added to LUP
2015-07-01 10:29:16
date last changed
2015-07-01 10:29:16
@misc{7471645,
  abstract     = {This thesis focuses on seasoned equity offerings and aims to examine announcement effects and long-run performance of SEO firms on the Swedish stock exchanges, during the recovery phase of the global financial crisis. Also, an OLS regression is run in order to explain post-SEO performance using the independent variables book-to-market ratio, market capitalization and the firms’ number of SEOs during the time period. 

The study takes on a deductive approach measuring and analyzing SEO firms’ performance, meaning that hypotheses are deduced based on earlier research and theory. Earlier studies and theory generally suggest negative announcement effects, along with long-run underperformance of firms that issue seasoned equity. 

The sample consists of Swedish firms listed on NASDAQ OMX Stockholm and First North. More specifically, the sample includes a total of 123 observations measuring announcement effects and 81 observations measuring long-run performance. The results generated by the study show clear signs of negative announcement effects and long-run underperformance for Swedish SEO firms during the time period. However, long-run underperformance cannot be concluded for SEO firms listed on First North during the time period. Moreover, the independent variable for number of SEOs is negatively significant for firms listed on NASDAQ OMX Stockholm. The results suggest that signaling theories, which say that an SEO has a negative impact on firm value, are applicable on the Swedish stock markets. Furthermore, interpreting the results hint that the markets have not been efficient in terms of initial re-evaluation of stock prices after information of SEO announcements.},
  author       = {Östgren, Richard and Brunskog, Erik},
  keyword      = {Seasoned Equity Offering,SEO,Announcement Effects,Long-Run Performance,Event Study,Cumulative Abnormal Return,Market Efficiency,Swedish Stock Markets.},
  language     = {eng},
  note         = {Student Paper},
  title        = {Post-SEO Performance in the Recovery Phase of the Financial Crisis},
  year         = {2015},
}