Devrim Yaman

Does the Sequence of Seasoned Equity Offerings Matter

We investigate the relation between announcement period returns and the sequence of seasoned equity offerings (SEOs) for industrial, financial, and utility firms making multiple offerings. For industrial firms, there is a monotonically positive relation between the returns and the sequence of issues. Further, the stock price reactions to the fourth and subsequent issues by industrial firms are insignificant. For firms that conduct at least two SEOs, there is no difference in returns between industrial firms and utilities or financial institutions. The lower negative returns for later announcements by industrial firms can be explained by reduced adverse selection costs.

Why Do Firms Issue Equity After Splitting Stocks

This paper examines the motivations of firms that conduct seasoned equity offerings (SEOs) after splitting stocks. We find no difference in equity announcement and issue period returns between these firms and other equity-issuing firms, suggesting that firms do not split stocks to reveal information and reduce adverse selection costs at the subsequent SEO. However, because investors react positively to split announcements, firms that issue equity after splitting stocks sell new shares at a higher price and raise more funds. We also find that firms split stocks to make the subsequent SEO more marketable to individual investors who are attracted to low-priced shares. Copyright 2003 by the Eastern Finance Association.

Why do Firms Issue Global Bonds

Purpose - This paper aims to examine the motivations of firms that issue global bonds. Specifically, it seeks to test whether firms are motivated to offer bonds in multi-markets to raise more capital, take advantage of being well-known in foreign markets and/or owing to poor domestic economic conditions. Design/methodology/approach - A sample of global bond offerings of US industrial firms during the period 1995 to 2001 was studied. Logistic regressions were used to examine the determinants of the choice between global and domestic debt offerings. The factors that explain the stock price reaction of global bond issues were also analyzed. Findings - The authors find evidence suggesting that firms with a good reputation abroad and firms that want to raise large amounts of funds choose to issue global bonds instead of domestic bonds. Firms also tend to issue global bonds when the domestic economy is weak. In addition, the stock markets do not react more positively to global bond issues than domestic bond issues, suggesting that the issuing cost of global bonds is not lower than the cost of domestic bonds. Research limitations/implications - Future researchers may want to investigate why some firms choose to issue global bonds while others choose Eurobonds when they want to issue debt internationally. Practical implications - The findings of this study suggest that, although firms might be able to raise more capital by issuing global bonds, the issuing costs are not lower. Originality/value - This is the first paper to study the determinants of the choice between global bonds and domestic bonds and examine the factors that affect the stock price reaction to global bonds.

Choice of debt in dual offerings

In this study we analyze the determinants of the type and structure of debt included in dual offerings of debt and equity. Our sample consists of 54 dual offerings of convertible bond and common stock (CBCS) and 258 dual offerings of straight bond and common stock (SBCS). We find that firms with high asset substitution problems are more likely to issue CBCS offerings instead of SBCS offerings. These firms are also more likely to include convertible bonds with a high probability of conversion in the issue. The probability of CBCS offerings is higher for firms with low information asymmetry and during high interest rate periods. We also find that the announcement returns of CBCS offerings are lower than the returns of SBCS offerings.