Categorization of secondary equity offerings and its effect on share prices: evidence from Thailand.

Abstract

This study aims to identify the effects of secondary equity offering on share price in Thailand. Secondary equity offerings (SEO) have been categorized as per amount and time comparing to its first issuance or IPO. Under Time category the SEOs have been categorized into 3 categories which are Early SEO, Mid SEO and Grown SEO. If the SEO was issued within 5 years of the company’s IPO then it is Early SEO, if the SEO was issued between 5 to 10 years after the IPO then it is Mid SEO and if the SEO was issued 10 years after the IPO of the company the it will be called as Grown SEO. The SEOs have been categorized under Amount category into 4 categories and these are Small SEO, Medium SEO, Big SEO and Super SEO. If the SEO amount is 50% of the IPO amount of the company the SEO will be called as Small SEO, if the SEO amount is between 50% to 100% of the IPO amount then the SEO will be called as Medium SEO, if the SEO amount is between 100% to 200% of the IPO amount then the SEO is Big SEO and if the SEO amount is more than 200% of the IPO amount then the SEO will be called as Super SEO. We conducted the study using event study method. We found that all types of SEOs under each categories of Time category of SEOs and Amount category of SEOs have net average number of days with significant positive return in the window period. We have ranked the types of SEOs of both Time category and Amount category in accordance with net average number of days with significant positive return. Under Time category we have found that the Early SEOs has highest net average number of days with significant positive return and then Mid SEOs and after that Grown SEOs. Under Amount category, we have found that Big SEOs have the highest net average number of days with significant positive returns. After that Super SEOs has the 2nd highest net average number of days with significant positive return, after that Medium SEOs and Small SEOs under the Amount categories of SEOs.