Abstract
We develop properties of abnormal return for equity offers that have been timed to periods of firm-specific overvaluation and empirically test a sample of 174 equity carve-outs for these characteristics. While carve-outs exhibit clear signs of market timing, these phenomena are not detectable uniformly across time but can be traced to the 1998-2000 hot-market period. Our arguments imply that pre-offer run-ups of abnormal return and decreasing cross-sectional variance of event-time post-offer abnormal return, rather than long-term underperformance or the level of a market index, can serve as indicators for market timing. Results provide a basis to empirically reassess the time variance of long-term IPO and SEO performance.
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