Abstract
The average Chinese SEO is executed about one year after the initial announcement due to regulative screening. Although overvaluation at the announcement is not necessary for market timing, we find a significant stock price run-up and reversal surrounding SEO announcements, which are consistent with US findings. We also find stock prices are overvalued over four years preceding the announcement. These results suggest that Chinese firms announce SEOs following persistent overvaluation and additional stock price run-ups. The market price at execution is also overpriced, suggesting that market timing is an important motive for Chinese SEOs. We argue that regulative screening makes market timing difficult and accordingly Chinese managers are moderate in public seasoned equity offerings.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
