Firm age, idiosyncratic risk, and long-run SEO underperformance

Chia Wei Huang, Po Hsin Ho, Chih Yung Lin, Ju Fang Yen

研究成果: 雜誌貢獻期刊論文同行評審

4 引文 斯高帕斯(Scopus)


Post-issue stock underperformance is driven, at least in part, by young issuers with contemporary decline in idiosyncratic risk (proxied by expected idiosyncratic volatility) exposure. We show that the SEO long-run underperformance primarily occurs in young issuers. The intuition is that young firms generally have greater uncertainty about their future profitability due to greater intangible growth options. Therefore, when young firms finance investment from SEO proceeds, this uncertainty could be resolved because growth options are converted into assets in place, leading to a larger reduction in idiosyncratic risk than their matched non-issuers suggest. Furthermore, there is no evidence of post-issue stock underperformance and abnormal decline in idiosyncratic risk for mature issuers, supporting the growth option perspectives.

頁(從 - 到)246-266
期刊International Review of Economics and Finance
出版狀態已出版 - 1 11月 2014


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