The pricing of equity offerings
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BORIS DOI
Date of Publication
March 1991
Publication Type
Article
Division/Institute
Author
Sheehan, Dennis P. | |
Kadlec, Gregory B. |
Subject(s)
Series
Journal of Financial Economics
ISSN or ISBN (if monograph)
0304-405X
Publisher
North-Holland
Language
English
Description
Examination of 1,600 seasoned equity offerings reveals little evidence that underwriters systematically set offer prices below the market price on the major exchanges, though they may do so for NASDAQ issues. Quick round-trip transactions in seasoned offerings are not profitable, but subscribing to an offering and holding the stock for 30 days seems to be very profitable, especially in the NASDAQ market. In addition to seasoned offerings, we analyze 250 issues of new classes of preferred stock. These issues are not underpriced.