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

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

Authors

Hui Li

Hong Liu

Mingming Zhou



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