Abstract This paper tests a potential new determinant of discounts commonly found in Seasoned Equity Offerings (SEOs): the time distance between SEO announcement and the last publication of (quarterly) financial statements by the issuer. These statements constitute broadly disseminated and standardized information updates available to all market participants. Contrary to theories of information asymmetry and demand elasticity, but in line with theories of the superior sophistication of institutional investors, we find no robust significant effect of time distance on discounts. While some specifications suggest a negative association as predicted by the first two theories, this pattern proves sensitive to the inference approach and disappears once an interaction structure is taken into account. This interaction overlaps the main effect and, taken together, negates the influence of time distance on discounts. Further robustness analyses underscore the fragility of the relationship, leading to practically relevant near-null results. Our analysis utilizes peculiarities of the German stock market, which help isolate a potential effect, and thus focuses on accelerated SEOs in Germany between 2007 and 2021.
Betzer et al. (Mon,) studied this question.