Please use this identifier to cite or link to this item:
http://hdl.handle.net/10397/90025
Title: | How economic policy uncertainty affects the cost of raising equity capital : evidence from seasoned equity offerings | Authors: | Chan, YC Saffar, W Wei, KCJ |
Issue Date: | Apr-2021 | Source: | Journal of financial stability, Apr. 2021, v. 53, 100841 | Abstract: | Economic policy uncertainty (EPU) increases the cost of raising equity capital, especially when the economy is weak. A one standard deviation increase in the EPU index developed by Baker, Bloom, and Davis (2016) is associated with a 43 basis point increase in the price discount of seasoned equity offerings (SEOs) during the 2000−2014 period. The cross-sectional analysis shows that the EPU effect on SEO discounts is stronger for firms with greater dependence on government spending, less informative stock price, or a smaller EPU beta. Moreover, there are fewer SEO activities in periods when there is a high degree of policy uncertainty. | Keywords: | Economic policy uncertainty Seasoned equity offerings SEO discounts |
Publisher: | Elsevier | Journal: | Journal of financial stability | ISSN: | 1572-3089 | EISSN: | 1878-0962 | DOI: | 10.1016/j.jfs.2020.100841 | Rights: | © 2020 Elsevier B.V. All rights reserved. © 2020. This manuscript version is made available under the CC-BY-NC-ND 4.0 license http://creativecommons.org/licenses/by-nc-nd/4.0/. The following publication Chan, Y.-C., Saffar, W., & Wei, K. C. J. (2021). How economic policy uncertainty affects the cost of raising equity capital: Evidence from seasoned equity offerings. Journal of Financial Stability, 53, 100841 is available at https://dx.doi.org/10.1016/j.jfs.2020.100841. |
Appears in Collections: | Journal/Magazine Article |
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File | Description | Size | Format | |
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JFS_Epu_Ipo_PolyU.pdf | Pre-Published version | 1.46 MB | Adobe PDF | View/Open |
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