Wealth Effects of Seasoned Equity Offerings: A Meta Analysis

We use meta-analysis to review studies on announcement effects associated with seasoned equity offerings. Our sample includes 168 studies from 32 leading finance journals and SSRN working papers. The studies cover different countries, but the U.S. is particularly well-represented with 120 studies. We find a significantly mean cumulative abnormal return of -1.13%. Abnormal returns are more negative for equity issues by U.S. companies and for non-U.S. rights issues. In addition, wealth effects are more negative when there is insider trading before an equity issue, when the proceeds are used for debt reduction, and for issues by dividend-paying companies. All else equal, published papers report more negative wealth effects than working papers. We identify important avenues for future research.