Journal of Financial Economics
Volume 87, Issue 2, February 2008, Pages 281–307
 

---

Woojin Kim (a), Michael S. Weisbach (b), (c), (d), ,
a Korea University Business School, Seoul 136-701, South Korea
b Ohio State University, Columbus, Ohio, USA
c University of Illinois at Urbana-Champaign, Champaign, IL 61820, USA
d National Bureau of Economic Research, Cambridge, MA 02138, USA
http://dx.doi.org/10.1016/j.jfineco.2006.09.010



Abstract

This paper examines the motivations for public equity offers, using a sample of 17,226 initial public offerings and 13,142 seasoned equity offerings from 38 countries between 1990 and 2003. We estimate the uses of funds raised in both initial and seasoned offerings. Firms appear to spend incremental dollars on both R&D and capital expenditures, consistent with the investment financing explanation of equity issues. However, consistent with the mispricing explanation, high market to book firms tend to save more cash and offer a higher fraction of secondary shares in SEOs than low market to book firms.

Keywords

Publicly traded equity;
Investment financing;
Market timing;
IPO;
SEO