TY - JOUR
T1 - CEO-friendly boards and seasoned equity offerings
AU - Bhuyan, Md Nazmul Hasan
AU - Subedi, Meena
AU - Akter, Maimuna
PY - 2022/12/1
Y1 - 2022/12/1
N2 - This paper investigates the effect of CEO-friendly boards on seasoned equity offerings (SEOs). We provide evidence that CEO-friendly boards have a negative and statistically significant impact on SEO announcement returns. This finding suggests that SEO announcements by firms with CEO-friendly boards signal agency problems and, therefore, investors react negatively to such SEO announcements. We further provide evidence that the negative effect of CEO-friendly boards on SEO announcement returns is weaker in firms with high growth opportunities and high liquidity needs. Finally, we document that CEO-friendly boards are also negatively associated with post-SEO long-term performance.
AB - This paper investigates the effect of CEO-friendly boards on seasoned equity offerings (SEOs). We provide evidence that CEO-friendly boards have a negative and statistically significant impact on SEO announcement returns. This finding suggests that SEO announcements by firms with CEO-friendly boards signal agency problems and, therefore, investors react negatively to such SEO announcements. We further provide evidence that the negative effect of CEO-friendly boards on SEO announcement returns is weaker in firms with high growth opportunities and high liquidity needs. Finally, we document that CEO-friendly boards are also negatively associated with post-SEO long-term performance.
KW - Agency theory
KW - CEO-friendly boards
KW - Growth opportunities
KW - Liquidity needs
KW - Post-SEO long-term returns
KW - Seasoned equity offerings
KW - Social capital theory
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U2 - 10.1016/j.jbef.2022.100761
DO - 10.1016/j.jbef.2022.100761
M3 - Article
SN - 2214-6350
VL - 36
JO - Journal of Behavioral and Experimental Finance
JF - Journal of Behavioral and Experimental Finance
M1 - 100761
ER -