Bank regulation, financial crisis, and the announcement effects of seasoned equity offerings of US commercial banks

Li, Hui; Liu, Hong; Siganos, Antonios; Zhou, Mingming

Abstract

This paper studies the differences in the announcement effects of seasoned equity offerings (SEOs) of commercial banks and non-banks, and explores the influence of bank regulation and the financial crisis on such differences. We find that abnormal stock returns on SEO announcements for US commercial banks are significantly higher than those of non-banks, consistent with the hypothesis that bank regulations reduce the likelihood that bank SEOs signal overpriced equity. The propensity score matching-based difference-in-difference analysis indicates that the differences in stock returns between banks and non-banks decreased during the 2007–2009 financial crisis period and increased after the passage of the Dodd-Frank Act in 2010.

Citation

Li, H., Liu, H., Siganos, A., & Zhou, M. (2016). Bank regulation, financial crisis, and the announcement effects of seasoned equity offerings of US commercial banks. Journal of Financial Stability, 25, 37-46. https://doi.org/10.1016/j.jfs.2016.06.007

• Journal Article Type: Article
• Acceptance Date: Jun 16, 2016
• Online Publication Date: Jun 23, 2016
• Publication Date: 2016-08
• Deposit Date: Jul 6, 2021
• Journal: Journal of Financial Stability
• Print ISSN: 1572-3089
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 25
• Pages: 37-46
• DOI: https://doi.org/10.1016/j.jfs.2016.06.007
• Keywords: Seasoned equity offerings (SEOs), Announcement stock returns, Banks, Bank regulation, Financial crisis
• Public URL: http://researchrepository.napier.ac.uk/Output/2785036