Tough times for seasoned equity offerings: performance during the COVID pandemic

Marc Zenzius; Christian Flore; Dirk Schiereck

doi:10.1007/s11573-022-01089-6

Tough times for seasoned equity offerings: performance during the COVID pandemic

J Bus Econ. 2022;92(9):1491-1510. doi: 10.1007/s11573-022-01089-6. Epub 2022 Apr 13.

Authors

Marc Zenzius¹, Christian Flore¹, Dirk Schiereck¹

Affiliation

¹ Department of Business Administration, Economics and Law, Technische Universität Darmstadt, Hochschulstr. 1, 64289 Darmstadt, Germany.

Abstract

This study analyzes the wealth effects of SEO announcements in the US during the COVID-19 pandemic and its main determinants. We find significantly negative abnormal returns of - 8.6%. This provides persuasive evidence that capital markets reacted particularly negative during this period, reflecting higher degrees of uncertainty. We furthermore find that larger firms experience a better SEO performance and that COVID-19 related biotech & healthcare firms react particularly negative. This effect is more negative the lower the company valuation beforehand.

Keywords: Covid; Event study; SEO.