Research on the announcement effect of second equity offerings?——An quantitative analysis of Chinese infrastructure companies

Many issues have emerged currently regarding refinancing as a main financing source of Chinese listed companies. This study aims to identify key factors that influence the announcement effect of second equity offerings (SEOs) with 110 infrastructure companies listed on A-share stock market. By building a multivariate regression model, this study analyzed the influence factors from the perspective of the company’s fundamentals and the characteristics of refinancing, and found that the company’s fundamentals have same impact on the announcement effect. Return on equity, net profit margin and debt-to-equity ratio are all positively related to the accumulated abnormal return. The market pays more attention to the profitability when talking about SEOs. As to the characteristics of refinancing, the dilute ratio and the relative issuing scale have little impact on the announcement effect but the market does concern about the purpose of fund-raising.

Abstract licence: CC BY

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