Intended use of proceeds and the long-run performance of seasoned equity issuers

Autore, Don M.; Bray, David E.; Peterson, David R.

doi:10.1016/j.jcorpfin.2008.12.003

Cited by 67 publications

(93 citation statements)

References 38 publications

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“…The equity markets provide a means for firms to sell stock and use the proceeds for investment tenacities, such as acquisitions, capital expenditures, also for research and development. Fundamentally the use of proceeds filed SEC are investment, debt repayment, or general corporate purposes (Autore et., al 2009). The result is coherent with Walker & Yost (2008) that examined 438 Seasoned Equity Offering (SEO) companies and documented the firm's intended purpose for the proceeds, had identified three specific uses which are investment, debt repayment, and general corporate purposes.…”

Section: The Intended Use Of Ipo Proceedsmentioning

confidence: 99%

“…Autore et al, (2009) further stated that some companies might not have a specific purpose for raising equity and might not wish to divulge the intended purpose to the public. However, for the purpose of this study, to focus on three intended proceed namely financing for investment, debt repayment and working capital financing as opposed by simplified version of (Andriansyah & Messinis, 2016).…”

Section: The Intended Use Of Ipo Proceedsmentioning

confidence: 99%

“…Prior empirical studies have been conducted to measure the intended IPO proceeds with the post-issue operating performance (Andriansyah & Messinis, 2016;Autore et al, 2009;Walker & Yost, 2008, Busaba, Benveniste, & Guo (2001 and yet the information has very limited in exploiting the context of post-share price performance of IPO firms especially in Malaysia as stated in (Autore et al, 2009). Thus, future finding of this paper will add contribution towards the literatures as well for the investors and other stakeholders decision making.…”

Section: The Relationship Between Intended Use Of Ipo Proceeds With Smentioning

confidence: 99%

“…An alternative use of proceeds is to repay debt obligations. Since debt financing can sometime be more expensive, some firms may decide to payback its debt by using the proceeds from the IPO (Autore, Bray, & Peterson, 2009). In Malaysia, the other popular use of the proceeds is to finance their working capital to efficiently manage their cash flows in ensuring operation can be run smoothly.…”

Section: Introductionmentioning

confidence: 99%

“…Most of the firms in Malaysia are seeking for funding their investments, payback their debts and to finance their working capital by using the proceeds generated from the IPO issuance. This information on the intended use of the proceeds provide insight about firms' motives and objectives (Autore et al, 2009). Thus, the information might have influence of the stock performance where it can give a picture on how the stocks will be priced in the secondary market (Leone et al, 2007).…”

Section: Introductionmentioning

confidence: 99%

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Intended Use of Proceeds and the Performance of Initial Public Offerings (IPO)

et al. 2017

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Other than debt financing, Initial Public Offerings (IPO) become a common method of capital raising among firms for various purposes. Prospectus is issued on the pre-issuance of the IPO disclosing various mandatory and non-mandatory voluntary information to help the potential investors in their decision making process. Other than financial information on previous and forecasted future performance, the intended use of the IPO's proceeds information is one of the crucial information for the stakeholders especially the investors as they will be the financial contributor for the purposes. In one hand, the issuers may decide to issue highly priced IPO to fulfil their financial needs and other going-public motives. In the other hand, the investors willing to subscribe for the IPO to meet their investment target. The gap between the objectives of these two main stakeholders create uncertainties that may jeopardize the interest of the investors. Thus, the objective of this paper is to investigate the relationship between the intended uses of the IPO's proceed disclosed in the prospectus and their subsequent performance of the stocks. The result of the study can provide input for the investors and other stakeholders for their decision making process to meet their respective objectives.

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Section: The Intended Use Of Ipo Proceedsmentioning

confidence: 99%

Section: The Intended Use Of Ipo Proceedsmentioning

confidence: 99%

Section: The Relationship Between Intended Use Of Ipo Proceeds With Smentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Intended Use of Proceeds and the Performance of Initial Public Offerings (IPO)

et al. 2017

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Foreshadowing as Impression Management: Illuminating the Path for Security Analysts

Busenbark

Lange

Certo

2017

Strategic Management Journal

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Research summary: Managers can disclose information to security analysts as a form of impression management, but doing so is problematic because competitors can use that same information at the expense of the firm. We identify an impression management technique we call foreshadowing, which refers to hinting about future potential strategic activity. Foreshadowing provides information of value to analysts that can influence their evaluations of a firm, but not so much information as to put the firm at a competitive disadvantage. We hypothesize and find that managers who foreshadow acquisition announcements receive fewer analyst downgrades following the announcements, especially when there is more analyst uncertainty about the firm. We also hypothesize and find that analysts' responses to foreshadowing positively influence the likelihood that managers eventually acquire other firms.Managerial summary: Security analysts are often suspicious when firms announce acquisitions as those announcements are cumbersome to analyze on short notice and raise questions about managerial motivations that might not represent the best interests of the firm. We find that managers can improve analyst reactions to acquisition announcements by disclosing some information of value to analysts-specifically by hinting that an acquisition could occur in the future. We refer to such hints as foreshadowing. Foreshadowing entails giving analysts information to reduce their suspicions and facilitate their analyses, but not so much information as to degrade the firm's competitive information advantage over other firms. Foreshadowing also allows managers the option to reconsider actually executing the acquisition if analysts respond negatively to its possibility.

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Do managers keep their word? The disclosure of merger intention at pre-merger issuance and M&A performance

Guo

et al. 2019

Finance Research Letters

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Intended use of proceeds and the long-run performance of seasoned equity issuers

Cited by 67 publications

References 38 publications

Intended Use of Proceeds and the Performance of Initial Public Offerings (IPO)

Intended Use of Proceeds and the Performance of Initial Public Offerings (IPO)

Foreshadowing as Impression Management: Illuminating the Path for Security Analysts

Do managers keep their word? The disclosure of merger intention at pre-merger issuance and M&A performance

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