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ETF Ownership and Seasoned Equity Offerings

Published online by Cambridge University Press:  11 April 2023

Kevin P. Evans ,
Woon Sau Leung Open the ORCID record for Woon Sau Leung [Opens in a new window] ,
Junqiu Li  and
Khelifa Mazouz
Kevin P. Evans
Affiliation:
Cardiff University Business School evansk1@cardiff.ac.uk
Woon Sau Leung*
Affiliation:
University of Edinburgh Business School
Junqiu Li
Affiliation:
Cardiff University Business School lij117@cardiff.ac.uk
Khelifa Mazouz
Affiliation:
Cardiff University Business School mazouzk@cardiff.ac.uk
*
woonsau.leung@ed.ac.uk (corresponding author)
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Abstract

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This article investigates the impact of exchange-traded fund (ETF) ownership on seasoned equity offerings (SEOs). We find that increases to firms’ ETF ownership is positively related to their propensity to conduct an SEO. ETF ownership is also associated with less negative SEO announcement returns, smaller discounts, and better long-run stock returns. Our evidence is consistent with equity issuance following investor demand for stocks driven by greater participation in ETFs, suggesting a possible alternative source of market timing opportunity.

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , Volume 59 , Issue 4 , June 2024 , pp. 1821 - 1848
Creative Commons
Creative Common License - CCCreative Common License - BY
This is an Open Access article, distributed under the terms of the Creative Commons Attribution licence (https://creativecommons.org/licenses/by/4.0), which permits unrestricted re-use, distribution and reproduction, provided the original article is properly cited.
Copyright
© The Author(s), 2023. Published by Cambridge University Press on behalf of the Michael G. Foster School of Business, University of Washington

Footnotes

We thank an anonymous reviewer and Paul Malatesta (the editor) for the helpful comments and suggestions. All remaining errors are our own.

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