Abstract
AbstractThis paper tests how managerial financial education explains the valuation effects of seasoned equity offerings (SEOs). Using a sample of Taiwanese listed firms during 2007–2018, our results show that investors react more negatively to SEO announcements by firms with more financially educated managers (MFEMs). Such a negative effect is more pronounced for firms with a higher information asymmetry and more earnings management. Further evidence indicates that SEO firms with MFEMs are substantially overvalued and thus experience a significantly long‐run post‐SEO underperformance. MFEMs are also found to reduce their ownership prior to SEOs. Our overall results support the opportunism‐based information advantage hypothesis.
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