Does air pollution affect seasoned equity offering pricing? Evidence from investor bids

Lin, Han; Cheng, Xiaoke; Chan, Kam C.; Gao, Shenghao

doi:10.1016/j.finmar.2021.100657

Cited by 13 publications

(4 citation statements)

References 25 publications

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“…Moreover, poor air quality can impede people's cognitive ability (Zhang et al, 2018) and weaken drivers' perception and driving ability, and the traffic congestion will be more serious. Air quality can also affect people's mood (Chew et al, 2021; Zheng et al, 2019), which in turn will be reflected in trading price (Han et al, 2022). Accordingly, we add Temperature and Precipitation to the baseline model.…”

Section: Traffic Congestion and Stock Block Trading Premiummentioning

confidence: 99%

The price of the slow lane: Traffic congestion and stock block trading premium

Cao,

Qian,

Zhang

2023

Int Rev Finance

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Using data on city‐level daily traffic congestion and stock block trading, we investigate the impact of trader cities' traffic congestion on the stock block trading price. We find that higher level of traffic congestion in the traders' cities is associated with lower stock block trading premium, particularly when the information asymmetry between the trading parties is high. We also find that the buyers have more bargaining power in determining the price premium of block trading. Moreover, we employ a multi‐pronged approach to address the identification issue and find confirming evidence for the causal link.

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Section: Traffic Congestion and Stock Block Trading Premiummentioning

confidence: 99%

The price of the slow lane: Traffic congestion and stock block trading premium

Cao,

Qian,

Zhang

2023

Int Rev Finance

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“…Harmful effects of the issuance of SEOs could also be caused by offer price discounts or SEO underpricing (Han et al 2021;Autore and Gehy 2013;Huang and Levich 2003;Liu and Chung 2013;Su and Fleisher 1999). A study of SEOs for real estate investment trusts concluded that SEO offer prices are discounted significantly (Goodwin 2013; see also Lorenz 2020;Ghosh et al 2000;Ong et al 2011).…”

Section: Literature Reviewmentioning

confidence: 99%

Seasoned Equity Offerings and Differences in Share-Price Impact by Firm Categories

Abdullah

Zaby

2021

IJFS

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The seasoned equity offering (SEO) market plays a significant role in the economic development of a country by providing liquidity for ongoing commercialization and innovation. This study is a comprehensive analysis of 149 SEOs and their effect on share prices in Thailand between 2009 and 2019. SEOs are categorized based on their time categories (early, mid, and grown) and volume categories (small, medium, big, and super). Using the event study methodology (multi-factor model), we find that most SEOs under both categories have a negative cumulative abnormal return (CAR) in the window period. Ranking the types of SEOs reveals that grown SEOs have the highest proportion of negative CAR under the time categories. Under the volume categories, medium SEOs show the largest share. The results were validated by regression assumption tests provided by Gnu Regression, Econometrics and Time-series Library, and correspond to established theories. The paper also contains an extensive literature review of studies examining the link between SEOs and share-price development. Our findings have important implications for corporations, investors, and regulatory bodies and can thus help in increasing market confidence for sustainable corporate funding.

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“…They have found, as expected, largely detrimental effects of climate change on various economic and financial indicators. For example, it has been shown that firms in high-pollution cities tend to have higher costs of debt financing (Tan et al , 2022), higher cash holdings (Tan et al , 2021a), lower seasoned equity offer pricing (Han et al , 2021), less labor and more capital (Liu et al , 2021a), underpriced initial public offerings (Zhang et al , 2021a) and lower trade credit granted to customers (Tan et al , 2021b), among others.…”

Section: Introductionmentioning

confidence: 99%

“…First, we broadly contribute to the relation between carbon risk and audit fees. Prior studies have explored the effects of carbon risk on a variety of corporate practices (Han et al , 2021; Liu et al , 2021a; Zhang et al , 2021a) as well as the effects of firm characteristics on audit fees (Bryan et al , 2018; Wang et al , 2019; Yang et al , 2018), but our study is the first to draw a connection between carbon emission and audit fees. It is especially important due to the increasing importance of environmental factors in the audit risk assessment and the lack of exploration into the firms’ emissions profile role in its perceived audit risk.…”

Section: Introductionmentioning

confidence: 99%

Effects of carbon emissions on audit fees

Tan,

Chan,

Chang

et al. 2023

MAJ

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Purpose This paper aims to examine the effect of carbon emissions on audit fees. The authors hypothesize that firms in cities with higher carbon emission levels have lower reporting transparency, higher return volatility or are subject to higher reputation risk, causing them to be charged higher audit fees for auditing services. Design/methodology/approach The authors use panel data of 25,960 firm-year observations from a sample of Chinese firms. The carbon emission data for each Chinese city are obtained from the China Emission Accounts and Datasets for Emerging Economies. This paper adopts a multiple regression model to study the impact of carbon emissions on audit fees. Findings The authors find that firms located in cities with higher carbon emission levels and firms with more carbon emissions are charged, on average, a higher audit fee. This audit fee effect of carbon risk is transmitted by lessened information transparency and elevated financial risk within these firms. This paper shows that auditors consider carbon risk in their audit fee decisions and other factors that could influence audit risk and effort. Originality/value This study draws a connection between carbon emissions and audit fees. It is especially relevant due to the increasing importance of environmental factors in the audit risk assessment. In addition, the findings suggest that a firm implementing a proactive environmental strategy benefits the economy and decreases the costs to the firm for services such as auditing.

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Does air pollution affect seasoned equity offering pricing? Evidence from investor bids

Cited by 13 publications

References 25 publications

The price of the slow lane: Traffic congestion and stock block trading premium

The price of the slow lane: Traffic congestion and stock block trading premium

Seasoned Equity Offerings and Differences in Share-Price Impact by Firm Categories

Effects of carbon emissions on audit fees

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