Seasoned equity offerings and customer–supplier relationships

B-Tier
Journal: Journal of Financial Intermediation
Year: 2018
Volume: 33
Issue: C
Pages: 98-114

Authors (4)

Johnson, William C. (not in RePEc) Kang, Jun-Koo (not in RePEc) Masulis, Ronald W. (UNSW Sydney) Yi, Sangho (not in RePEc)

Score contribution per author:

0.503 = (α=2.01 / 4 authors) × 1.0x B-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

We investigate how seasoned equity offerings (SEOs) by issuers with large customers affect both trading partners’ market values and the relationship's health. We hypothesize that SEOs reveal adverse information about an issuer's major customers and find that issuers and their large customers experience negative returns on SEO announcements. These results are more pronounced when customers have higher levels of information asymmetry and when customer-supplier relationships are particularly important. Large customers of issuers experience larger declines in post-SEO sales, operating performance, and credit ratings than large customers of non-issuers. Also, SEO issuer sales to large customers and relationship duration significantly decline.

Technical Details

RePEc Handle
repec:eee:jfinin:v:33:y:2018:i:c:p:98-114
Journal Field
Finance
Author Count
4
Added to Database
2026-01-25