TY  - JOUR
AU  - DeAngelo,Harry
AU  - DeAngelo,Linda
AU  - Stulz,René M.
TI  - Fundamentals, Market Timing, and Seasoned Equity Offerings
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 13285
PY  - 2007
Y2  - July 2007
UR  - http://www.nber.org/papers/w13285
L1  - http://www.nber.org/papers/w13285.pdf
N1  - Author contact info:
Harry DeAngelo
Marshall School of Business
701 Exposition Blvd., Ste. 701
Los Angeles, CA 90089
E-Mail: hdeangelo@marshall.usc.edu

Linda DeAngelo
Marshall School of Business
701 Exposition Blvd., Ste. 701
Los Angeles, CA 90089
E-Mail: ldeangelo@marshall.usc.edu

Rene M. Stulz
The Ohio State University
Fisher College of Business
806A Fisher Hall
Columbus, OH 43210-1144
Tel: 614/292-1970
Fax: 614/292-2359
E-Mail: stulz_1@cob.osu.edu
AB  - Firms conduct SEOs to resolve a near-term liquidity squeeze, and not primarily to exploit market timing opportunities. Without the SEO proceeds, 62.6% of issuers would have insufficient cash to implement their chosen operating and non-SEO financing decisions the year after the SEO. Although the SEO decision is positively related to a firm's market-to-book (M/B) ratio and prior excess stock return and negatively related to its future excess return, these relations are economically immaterial. For example, a 150% swing in future net of market stock returns (from a 75% gain to a 75% loss over three years) increases by only 1% the probability of an SEO in the immediately prior year. Strikingly, most firms with quintessential "market timer" characteristics fail to issue stock and a non-trivial number of mature firms do issue stock, with current and former dividend payers raising more than half of all issue proceeds.
ER  -