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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
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
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