Investor Sentiment and Cross-Sectional Return after Share Issuance:Evidence from Seasonal Equity Offering in China Market

• 作者: Di Liu
• 来源期刊: 财经研究杂志(英文)
• 学科: 经济
• 关键词: Investor sentiment Cross-sectional return Seasonal equity offering China market
• 年，卷（期）: 2020,（1）
• 页码范围: 42-54
• 页数: 13页
• 分类号: F42

摘要

Our research on private placement of equity on China capital market reveals that firms prefer to equity financing when their stock price is overvalued and investor sentiment is high,following the market timing hypothesis.However,after private issuance,we document a significant positive abnormal return within three years.We believe firms choose to polish their financial statement before the exit of institutional investors and controlling shareholders.Through manipulation of discretional accruals,firms improve the profitability and market valuation,and help institutional investors and controlling shareholders obtain the abnormal return after private placement of equity.Nevertheless,such manipulation cannot be sustained and will do harm to other investors in the long-term.