{"id":16275,"date":"2021-08-31T02:41:44","date_gmt":"2021-08-30T18:41:44","guid":{"rendered":"https:\/\/www.tejwin.com\/?post_type=insight&#038;p=16275"},"modified":"2026-05-19T14:43:01","modified_gmt":"2026-05-19T06:43:01","slug":"event-study-the-announcement-impact-of-seasoned-equity-offerings-on-stock-returns","status":"publish","type":"insight","link":"https:\/\/www.tejwin.com\/en\/insight\/event-study-the-announcement-impact-of-seasoned-equity-offerings-on-stock-returns\/","title":{"rendered":"Do Seasoned Equity Offerings Affect Taiwan Stock Prices? Evidence from Event Study Analysis"},"content":{"rendered":"\n<figure class=\"wp-block-image aligncenter caption-align-center\"><img decoding=\"async\" src=\"https:\/\/www.tejwin.com\/wp-content\/uploads\/0irn7X2VhEGKO5xez.jpg\" alt=\"\"\/><figcaption class=\"wp-element-caption\">Photo Creds:&nbsp;<a href=\"https:\/\/unsplash.com\/photos\/ESsGNnhUiCg\" rel=\"noreferrer noopener\" target=\"_blank\">Unsplash<\/a><\/figcaption><\/figure>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_81 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a4c54829f979\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"ez-toc-cssicon\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a4c54829f979\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.tejwin.com\/en\/insight\/event-study-the-announcement-impact-of-seasoned-equity-offerings-on-stock-returns\/#Seasoned_Equity_Offerings_Are_Not_Just_Fundraising_%E2%80%94They_May_Also_Affect_Market_Confidence\" >Seasoned Equity Offerings Are Not Just Fundraising \u2014They May Also Affect Market Confidence<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.tejwin.com\/en\/insight\/event-study-the-announcement-impact-of-seasoned-equity-offerings-on-stock-returns\/#What_Are_Seasoned_Equity_Offerings_Why_Do_Companies_Conduct_Them\" >What Are Seasoned Equity Offerings? Why Do Companies Conduct Them?&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.tejwin.com\/en\/insight\/event-study-the-announcement-impact-of-seasoned-equity-offerings-on-stock-returns\/#What_Types_of_Seasoned_Equity_Offerings_Are_There_How_Can_Investors_Participate\" >What Types of Seasoned Equity Offerings Are There? How Can Investors Participate?&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.tejwin.com\/en\/insight\/event-study-the-announcement-impact-of-seasoned-equity-offerings-on-stock-returns\/#Seasoned_Equity_Offering_Process_and_Key_Timeline\" >Seasoned Equity Offering Process and Key Timeline<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.tejwin.com\/en\/insight\/event-study-the-announcement-impact-of-seasoned-equity-offerings-on-stock-returns\/#Quantifying_Seasoned_Equity_Offering_Announcements_Data_Methodology\" >Quantifying Seasoned Equity Offering Announcements: Data &amp; Methodology&nbsp;<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.tejwin.com\/en\/insight\/event-study-the-announcement-impact-of-seasoned-equity-offerings-on-stock-returns\/#Data_Sources_and_Settings\" >Data Sources and Settings&nbsp;<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.tejwin.com\/en\/insight\/event-study-the-announcement-impact-of-seasoned-equity-offerings-on-stock-returns\/#Empirical_Result_1_Significant_Negative_Abnormal_Returns_One_to_Two_Days_After_the_Announcement\" >Empirical Result 1: Significant Negative Abnormal Returns One to Two Days After the Announcement&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/www.tejwin.com\/en\/insight\/event-study-the-announcement-impact-of-seasoned-equity-offerings-on-stock-returns\/#Empirical_Result_2_The_t-test_Shows_a_Statistically_Significant_Short-Term_Reaction_After_the_Announcement\" >Empirical Result 2: The t-test Shows a Statistically Significant Short-Term Reaction After the Announcement&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/www.tejwin.com\/en\/insight\/event-study-the-announcement-impact-of-seasoned-equity-offerings-on-stock-returns\/#Conclusion_The_Negative_Reaction_to_Seasoned_Equity_Offering_Announcements_Is_Short-Term_While_Fundamentals_Remain_Key\" >Conclusion: The Negative Reaction to Seasoned Equity Offering Announcements Is Short-Term, While Fundamentals Remain Key&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/www.tejwin.com\/en\/insight\/event-study-the-announcement-impact-of-seasoned-equity-offerings-on-stock-returns\/#Suggested_Readings\" >Suggested Readings<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\" id=\"2f4e\"><span class=\"ez-toc-section\" id=\"Seasoned_Equity_Offerings_Are_Not_Just_Fundraising_%E2%80%94They_May_Also_Affect_Market_Confidence\"><\/span><strong>Seasoned Equity Offerings Are Not Just Fundraising \u2014They May Also Affect Market Confidence<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p id=\"e1cb\">Seasoned equity offerings are a common way for listed companies to raise capital. When companies need funding, they may issue new shares to the market instead of relying only on bank loans or corporate bonds. The proceeds can be used for capacity expansion, new business investments, debt repayment, financial restructuring, or future growth needs.<\/p>\n\n\n\n<p><strong><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-luminous-vivid-orange-color\">For investors, seasoned equity offerings are more than a financing tool; they are also important corporate events to monitor.<\/mark><\/strong> The announcement timing, fundraising purpose, issuance terms, and subsequent stock price reaction often reflect how the market reassesses the company\u2019s funding needs, potential equity dilution, and management\u2019s capital allocation ability.<\/p>\n\n\n\n<p><strong><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-luminous-vivid-orange-color\">This raises a key question: does a seasoned equity offering signal future growth, or does it create short-term pressure on share prices?<\/mark><\/strong> This article first introduces the basic concepts and process of seasoned equity offerings in Taiwan, and then uses an event study approach to examine the stock price reactions of Taiwanese listed companies before and after such announcements.<\/p>\n\n\n\n<p id=\"534a\"><strong>The empirical results show that, one to two trading days after the announcement, the average abnormal returns of Taiwanese listed companies are significantly negative.<\/strong> This suggests that the market tends to interpret seasoned equity offerings as a signal of equity dilution, higher funding needs, or valuation pressure in the short term. However, the negative reaction does not persist over the long run, indicating that the stock price impact is more likely a short-term announcement effect rather than clear evidence of deteriorating fundamentals.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"81c9\"><span class=\"ez-toc-section\" id=\"What_Are_Seasoned_Equity_Offerings_Why_Do_Companies_Conduct_Them\"><\/span><strong><strong>What Are Seasoned Equity Offerings? Why Do Companies Conduct Them?&nbsp;<\/strong><\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p id=\"7e81\"><strong><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-luminous-vivid-orange-color\">A seasoned equity offering refers to a company issuing new shares to raise cash from existing shareholders or market investors. <\/mark><\/strong>Unlike a stock dividend or bonus issue, the main purpose of a seasoned equity offering is to obtain external capital, which is usually related to business growth plans or financial structure adjustments.<\/p>\n\n\n\n<p id=\"7e81\">Common purposes of seasoned equity offerings include:<\/p>\n\n\n\n<figure class=\"wp-block-table is-style-stripes\"><table class=\"has-vivid-cyan-blue-background-color has-background\"><thead><tr><th><strong>Purpose<\/strong><\/th><th><strong>Description<\/strong><\/th><\/tr><\/thead><tbody><tr><td>Expanding business scale<\/td><td>For example, building new plants, increasing capacity, or investing in new business units<\/td><\/tr><tr><td>Repaying debt<\/td><td>Reducing the debt ratio and improving the financial structure<\/td><\/tr><tr><td>Strengthening working capital<\/td><td>Supporting daily operations, raw material purchases, or cash flow needs<\/td><\/tr><tr><td>Funding capital expenditures<\/td><td>Investing in equipment, R&amp;D, or long-term projects<\/td><\/tr><tr><td>Improving financial quality<\/td><td>Raising the equity ratio and reducing financial risk<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<div style=\"height:20px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p><strong><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-luminous-vivid-orange-color\">However, seasoned equity offerings do not necessarily have a positive impact on stock prices.<\/mark><\/strong> If a company issues new shares but fails to convert the raised capital into higher revenue and earnings growth, existing shareholders may face equity dilution pressure. The market may also interpret the offering as a sign of cash flow stress, which could lead to a short-term negative reaction in the stock price after the announcement.\u00a0<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_Types_of_Seasoned_Equity_Offerings_Are_There_How_Can_Investors_Participate\"><\/span><strong>What Types of Seasoned Equity Offerings Are There? How Can Investors Participate?&nbsp;<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Seasoned equity offerings in Taiwan are usually conducted according to regulations and company rules, with new shares allocated to different subscription groups. <strong>Common methods include subscription by existing shareholders, employee subscription, and public offering.<\/strong><\/p>\n\n\n\n<figure class=\"wp-block-table is-style-stripes\"><table class=\"has-vivid-cyan-blue-background-color has-background\"><thead><tr><th><strong>Subscription Method<\/strong><\/th><th>Description<\/th><th><strong>Meaning for Investors<\/strong><\/th><\/tr><\/thead><tbody><tr><td>Existing shareholder subscription<\/td><td>The company allocates subscription rights based on each shareholder\u2019s existing ownership percentage<\/td><td>Existing shareholders can subscribe to maintain their ownership ratio and reduce dilution<\/td><\/tr><tr><td>Employee subscription<\/td><td>The company reserves part of the new shares for employees to subscribe<\/td><td>May help strengthen employee incentives<\/td><\/tr><tr><td>Public offering<\/td><td>Part of the new shares are sold publicly, allowing investors to participate through subscription or lottery<\/td><td>General investors may have the opportunity to subscribe at the offering price<\/td><\/tr><tr><td>Specific person subscription<\/td><td>If existing shareholders or employees do not fully subscribe, the remaining shares may be subscribed by specific persons<\/td><td>May affect how the market interprets the company\u2019s funding demand and subscription demand<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<div style=\"height:20px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p>The subscription price of seasoned equity offerings is usually lower than the market price to improve investors\u2019 willingness to participate. Therefore, investors may pay attention to the <strong><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-luminous-vivid-orange-color\">\u201csubscription discount\u201d<\/mark><\/strong> as a potential short-term opportunity. However, if the discount is too large, the market may become concerned about post-offering dilution pressure, and the stock price may still come under pressure.<br><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Seasoned_Equity_Offering_Process_and_Key_Timeline\"><\/span><strong>Seasoned Equity Offering Process and Key Timeline<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>For investors, a seasoned equity offering should not be viewed only from the announcement date. From the board or shareholders\u2019 meeting resolution, offering terms announcement, ex-rights subscription record date, to the listing of new shares, <strong><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-luminous-vivid-orange-color\">each stage may have different implications for stock prices, liquidity, and short-term supply-demand conditions.<\/mark> <\/strong>Therefore, understanding the event timeline helps investors better assess the market reaction and the potential meaning behind price movements before and after the offering.<\/p>\n\n\n\n<p>The seasoned equity offering process in Taiwan\u2019s stock market is as follows:<\/p>\n\n\n\n<p><strong>Figure 1: Seasoned Equity Offering Process and Key Dates<\/strong><\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img fetchpriority=\"high\" decoding=\"async\" width=\"1024\" height=\"576\" src=\"https:\/\/www.tejwin.com\/wp-content\/uploads\/\/image-884-1024x576.png\" alt=\"\" class=\"wp-image-46209\" srcset=\"https:\/\/www.tejwin.com\/wp-content\/uploads\/image-884-1024x576.png 1024w, https:\/\/www.tejwin.com\/wp-content\/uploads\/image-884-300x169.png 300w, https:\/\/www.tejwin.com\/wp-content\/uploads\/image-884-150x84.png 150w, https:\/\/www.tejwin.com\/wp-content\/uploads\/image-884-768x432.png 768w, https:\/\/www.tejwin.com\/wp-content\/uploads\/image-884-1536x864.png 1536w, https:\/\/www.tejwin.com\/wp-content\/uploads\/image-884.png 1672w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<div style=\"height:20px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<figure class=\"wp-block-table is-style-stripes\"><table class=\"has-vivid-cyan-blue-background-color has-background\"><thead><tr><th>Key Date<\/th><th>Description<\/th><th>Possible Impact<\/th><\/tr><\/thead><tbody><tr><td>Board \/ Shareholders\u2019 Meeting Resolution Date<\/td><td>An important date when the company decides to conduct a seasoned equity offering, and when the market receives the offering information<\/td><td>The market may begin to reassess the company\u2019s valuation<\/td><\/tr><tr><td>Ex-rights Subscription Record Date<\/td><td>Determines which shareholders are eligible to subscribe for the new shares<\/td><td>Affects whether existing shareholders can participate in the subscription<\/td><\/tr><tr><td>Record Date<\/td><td>Investors must complete share transfer registration by this date to be eligible for subscription<\/td><td>May affect short-term trading behavior<\/td><\/tr><tr><td>Payment Period<\/td><td>Existing shareholders, employees, or public offering investors pay for the subscribed shares<\/td><td>Reflects investors\u2019 willingness to participate<\/td><\/tr><tr><td>Listing Date of New Shares<\/td><td>The newly issued shares are officially listed and become tradable<\/td><td>If investor interest is low, selling pressure may emerge<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<div style=\"height:20px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p>In this event study, the<strong><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-luminous-vivid-orange-color\"> \u201cshareholders\u2019 meeting resolution date\u201d <\/mark><\/strong>is used as the event date to examine whether stock prices show abnormal reactions after the market receives information about the seasoned equity offering. This date is selected because it is usually one of the earliest key points at which the market becomes aware of the seasoned equity offering, and can therefore be regarded as the critical date when the event is formally transmitted to the market.<\/p>\n\n\n\n<div class=\"wp-block-buttons has-custom-font-size has-small-font-size is-layout-flex wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button has-custom-width wp-block-button__width-100\"><a class=\"wp-block-button__link has-vivid-cyan-blue-to-vivid-purple-gradient-background has-background has-medium-font-size has-custom-font-size wp-element-button\">TEJ Shareholders\u2019 Meeting Database \u2013 From Shareholders\u2019 Meeting Resolutions to Dividend Distribution: Mastering Key Shareholders\u2019 Meeting Information<\/a><\/div>\n<\/div>\n\n\n\n<div style=\"height:20px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Quantifying_Seasoned_Equity_Offering_Announcements_Data_Methodology\"><\/span><strong>Quantifying Seasoned Equity Offering Announcements: Data &amp; Methodology&nbsp;<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>To examine whether seasoned equity offering announcements affect stock prices, this study adopts an event study approach. <strong><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-luminous-vivid-orange-color\">The core idea of an event study is to first estimate a stock\u2019s expected return under normal market conditions, and then compare it with the actual return after the event.<\/mark><\/strong> If the actual return is significantly higher or lower than the expected return, it can be regarded as an abnormal return, which helps assess whether the market reacted to the event announcement.<\/p>\n\n\n\n<p>This study uses Taiwan-listed companies with seasoned equity offering events as the research sample, and defines the <mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-luminous-vivid-orange-color\"><strong>\u201cshareholders\u2019 meeting date\u201d<\/strong><\/mark> as the event date. The reason for using the shareholders\u2019 meeting date is that the market usually receives key information related to the seasoned equity offering around this period, making it an important date when the event is formally incorporated into market prices.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Data_Sources_and_Settings\"><\/span><strong>Data Sources and Settings&nbsp;<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Data sources:<\/strong> TEJ Listed-company fundamentals, Capital change data, TEJ stock price data, and Fama-French factors.<\/li>\n\n\n\n<li><strong>Sample scope:<\/strong> Seasoned equity offering events of Taiwan-listed companies.<\/li>\n\n\n\n<li><strong>Sample selection:<\/strong> Excludes cash capital increases for financial restructuring, capital reduction followed by capital increase, and other non-standard cash fundraising events. Samples with insufficient data or unsuitable for analysis are also excluded.<\/li>\n\n\n\n<li><strong>Final sample size:<\/strong> Approximately 140 seasoned equity offering events.<\/li>\n\n\n\n<li><strong>Event date:<\/strong> Shareholders\u2019 meeting resolution date.<\/li>\n\n\n\n<li><strong>Estimation window:<\/strong> From 260 to 10 trading days before the event.<\/li>\n\n\n\n<li><strong>Event window:<\/strong> From 5 trading days before to 5 trading days after the event.<\/li>\n\n\n\n<li><strong>Expected return model:<\/strong> Fama-French five-factor model.<\/li>\n\n\n\n<li><strong>Observed indicators:<\/strong> Average abnormal return, AR, and cumulative abnormal return, CAR.<\/li>\n\n\n\n<li><strong>Statistical test:<\/strong> Tests whether the daily abnormal return is significantly different from zero.<\/li>\n<\/ul>\n\n\n\n<p><strong>Figure 2: Event Study Timeline<\/strong><\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img decoding=\"async\" width=\"1024\" height=\"342\" src=\"https:\/\/www.tejwin.com\/wp-content\/uploads\/image-885.png\" alt=\"\" class=\"wp-image-46211\" srcset=\"https:\/\/www.tejwin.com\/wp-content\/uploads\/image-885.png 1024w, https:\/\/www.tejwin.com\/wp-content\/uploads\/image-885-300x100.png 300w, https:\/\/www.tejwin.com\/wp-content\/uploads\/image-885-150x50.png 150w, https:\/\/www.tejwin.com\/wp-content\/uploads\/image-885-768x257.png 768w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<div style=\"height:20px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p>This study uses the <strong><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-luminous-vivid-orange-color\">Fama-French five-factor model<\/mark><\/strong> to estimate expected returns. The model includes the market risk premium, size factor, book-to-market factor, profitability factor, and investment factor, which helps control for systematic factors that may affect individual stock returns. If the actual return during the event window is lower than the model-estimated expected return, it results in a negative abnormal return. Conversely, if the actual return is higher than the expected return, it results in a positive abnormal return.<\/p>\n\n\n\n<p><strong>Compared with simply observing raw returns before and after the event, the event study method further controls for systematic factors such as market, size, value, profitability, and investment style. <\/strong>This allows the study to focus more directly on the excess price reaction caused by the seasoned equity offering announcement itself.<\/p>\n\n\n\n<div class=\"wp-block-buttons is-layout-flex wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button has-custom-width wp-block-button__width-100\"><a class=\"wp-block-button__link has-vivid-cyan-blue-to-vivid-purple-gradient-background has-background has-medium-font-size has-custom-font-size wp-element-button\">\ud83d\udc49 Professional Data Services &#8211; Event-Driven Data<\/a><\/div>\n<\/div>\n\n\n\n<div style=\"height:20px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Empirical_Result_1_Significant_Negative_Abnormal_Returns_One_to_Two_Days_After_the_Announcement\"><\/span><strong>Empirical Result 1: Significant Negative Abnormal Returns One to Two Days After the Announcement&nbsp;<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>According to the event study results, the average abnormal return becomes clearly negative one to two trading days after the seasoned equity offering announcement. This indicates that, after receiving the seasoned equity offering information, the market shows a relatively negative pricing reaction in the short term.<\/p>\n\n\n\n<p><strong>Figure 3: Trends in Average Abnormal Returns and Cumulative Abnormal Returns<\/strong><\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" width=\"1024\" height=\"718\" src=\"https:\/\/www.tejwin.com\/wp-content\/uploads\/\/image-886-1024x718.png\" alt=\"\" class=\"wp-image-46215\" srcset=\"https:\/\/www.tejwin.com\/wp-content\/uploads\/image-886-1024x718.png 1024w, https:\/\/www.tejwin.com\/wp-content\/uploads\/image-886-300x210.png 300w, https:\/\/www.tejwin.com\/wp-content\/uploads\/image-886-150x105.png 150w, https:\/\/www.tejwin.com\/wp-content\/uploads\/image-886-768x539.png 768w, https:\/\/www.tejwin.com\/wp-content\/uploads\/image-886-1536x1077.png 1536w, https:\/\/www.tejwin.com\/wp-content\/uploads\/image-886.png 2048w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<div style=\"height:20px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-luminous-vivid-orange-color\"><strong>From the figure, the average abnormal return clearly weakens one to two trading days after the event date.<\/strong> <\/mark>This suggests that investors may reassess the impact of the seasoned equity offering on equity dilution, funding needs, and short-term supply-demand conditions after the announcement. This result is also consistent with the market\u2019s common interpretation of seasoned equity offerings: when a company raises capital by issuing new shares, investors may first react to concerns over equity dilution, higher funding needs, or the possibility that the company\u2019s current share price is overvalued.<\/p>\n\n\n\n<p><strong><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-luminous-vivid-orange-color\">However, abnormal returns gradually return to a level close to zero in the following trading days.<\/mark><\/strong> This indicates that the negative impact of the seasoned equity offering announcement is more likely a short-term reaction, as the market may gradually digest the relevant information within a few days after the announcement.<\/p>\n\n\n\n<p><strong><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-luminous-vivid-orange-color\">It is worth noting that the market reaction may not be most obvious on the event date itself.<\/mark> <\/strong>One possible reason is that companies often release material information after the market closes, meaning investors\u2019 actual reaction may be delayed until the next trading day. Therefore, when analyzing the impact of corporate events on stock prices, investors should not focus only on the announcement date, but should also include several trading days after the announcement in the analysis.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Empirical_Result_2_The_t-test_Shows_a_Statistically_Significant_Short-Term_Reaction_After_the_Announcement\"><\/span><strong>Empirical Result 2: The t-test Shows a Statistically Significant Short-Term Reaction After the Announcement&nbsp;<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In addition to observing the trend of average abnormal returns, this study further tests whether daily abnormal returns are significantly different from zero. If abnormal returns are statistically significant, it indicates that the event has an identifiable impact on stock prices, rather than simply reflecting random market fluctuations.<\/p>\n\n\n\n<p><strong>Figure 4: t-test Results for Abnormal Returns<\/strong><\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"768\" src=\"https:\/\/www.tejwin.com\/wp-content\/uploads\/\/image-887-1024x768.png\" alt=\"\" class=\"wp-image-46217\" srcset=\"https:\/\/www.tejwin.com\/wp-content\/uploads\/image-887-1024x768.png 1024w, https:\/\/www.tejwin.com\/wp-content\/uploads\/image-887-300x225.png 300w, https:\/\/www.tejwin.com\/wp-content\/uploads\/image-887-150x113.png 150w, https:\/\/www.tejwin.com\/wp-content\/uploads\/image-887-768x576.png 768w, https:\/\/www.tejwin.com\/wp-content\/uploads\/image-887.png 1448w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<div style=\"height:20px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p><strong><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-luminous-vivid-orange-color\">The test results show that seasoned equity offering announcements do trigger short-term stock price reactions.<\/mark> <\/strong>In particular, the market reaction is more evident one to two trading days after the announcement, suggesting that investors tend to make a short-term negative assessment of seasoned equity offerings.<\/p>\n\n\n\n<p>This also reminds investors that when facing major corporate financing events, they should not only observe whether a company conducts a seasoned equity offering, but also further evaluate the use of proceeds, industry conditions, the company\u2019s financial structure, and the market\u2019s view of its valuation. The same type of seasoned equity offering may lead to different market reactions depending on the industry, business cycle, and company fundamentals.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion_The_Negative_Reaction_to_Seasoned_Equity_Offering_Announcements_Is_Short-Term_While_Fundamentals_Remain_Key\"><\/span><strong>Conclusion: The Negative Reaction to Seasoned Equity Offering Announcements Is Short-Term, While Fundamentals Remain Key&nbsp;<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>This study uses an event study approach to examine stock price reactions before and after seasoned equity offering announcements by Taiwan-listed companies. <strong><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-luminous-vivid-orange-color\">The results show that, one to two trading days after the announcement, average abnormal returns are clearly negative. <\/mark><\/strong><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-black-color\">This indicates that the market tends to first price in concerns over equity dilution, higher funding needs, and valuation pressure in the short term.\u00a0<\/mark><\/p>\n\n\n\n<p>However, this negative effect does not persist for a long period. <strong><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-luminous-vivid-orange-color\">Abnormal returns gradually return to a level close to zero in the following days, suggesting that the impact of seasoned equity offering announcements on stock prices is more likely a short-term announcement effect, <\/mark><\/strong><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-black-color\">rather than clear evidence of deteriorating long-term fundamentals.\u00a0<\/mark><\/p>\n\n\n\n<p><strong><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-luminous-vivid-orange-color\">For investors, seasoned equity offerings should not be simply viewed as either good news or bad news. <\/mark><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-black-color\">Instead, they should be evaluated together with the use of proceeds, issuance terms, financial structure, industry conditions, and market expectations.<\/mark> <\/strong>If the proceeds are used for capacity expansion, R&amp;D, or strengthening long-term competitiveness, the stock may return to fundamental-based valuation after the short-term negative reaction. However, if the offering size is too large, or if the proceeds are mainly used for debt repayment or working capital needs, market concerns over dilution and financial pressure may become more pronounced.\u00a0<\/p>\n\n\n\n<div class=\"wp-block-buttons is-layout-flex wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button has-custom-width wp-block-button__width-100\"><a class=\"wp-block-button__link has-vivid-cyan-blue-to-vivid-purple-gradient-background has-background has-medium-font-size has-custom-font-size wp-element-button\"><strong>TQuant Station: A One-Stop Quantitative Research Platform That Helps Investors Easily Overcome PIT Data and Programming Barriers<\/strong><\/a><\/div>\n<\/div>\n\n\n\n<div style=\"height:20px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Suggested_Readings\"><\/span>Suggested Readings<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<div class=\"wp-block-columns is-layout-flex wp-container-core-columns-is-layout-28f84493 wp-block-columns-is-layout-flex\">\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\">\n<figure class=\"wp-block-embed is-type-wp-embed is-provider-tej wp-block-embed-tej\"><div class=\"wp-block-embed__wrapper\">\n<blockquote class=\"wp-embedded-content\" data-secret=\"FpK0rXYOUE\"><a href=\"https:\/\/www.tejwin.com\/en\/news\/shareholders-meeting\/\">Shareholders&#8217; Meeting<\/a><\/blockquote><iframe class=\"wp-embedded-content\" sandbox=\"allow-scripts\" security=\"restricted\" style=\"position: absolute; visibility: hidden;\" title=\"&#8220;Shareholders&#8217; Meeting&#8221; &#8212; TEJ\" src=\"https:\/\/www.tejwin.com\/en\/news\/shareholders-meeting\/embed\/#?secret=a8bdrA2mi5#?secret=FpK0rXYOUE\" data-secret=\"FpK0rXYOUE\" width=\"600\" height=\"338\" frameborder=\"0\" marginwidth=\"0\" marginheight=\"0\" scrolling=\"no\"><\/iframe>\n<\/div><\/figure>\n<\/div>\n\n\n\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\">\n<figure class=\"wp-block-embed is-type-wp-embed is-provider-tej wp-block-embed-tej\"><div class=\"wp-block-embed__wrapper\">\n<blockquote class=\"wp-embedded-content\" data-secret=\"I4HT8n8Sbk\"><a href=\"https:\/\/www.tejwin.com\/en\/insight\/forecasting-dividend-rebound-probability-with-ex-dividend-event-studies\/\">Forecasting Dividend Rebound Probability with Ex-Dividend Event Studies<\/a><\/blockquote><iframe class=\"wp-embedded-content\" sandbox=\"allow-scripts\" security=\"restricted\" style=\"position: absolute; visibility: hidden;\" title=\"&#8220;Forecasting Dividend Rebound Probability with Ex-Dividend Event Studies&#8221; &#8212; TEJ\" src=\"https:\/\/www.tejwin.com\/en\/insight\/forecasting-dividend-rebound-probability-with-ex-dividend-event-studies\/embed\/#?secret=2M2m9lYt0C#?secret=I4HT8n8Sbk\" data-secret=\"I4HT8n8Sbk\" width=\"600\" height=\"338\" frameborder=\"0\" marginwidth=\"0\" marginheight=\"0\" scrolling=\"no\"><\/iframe>\n<\/div><\/figure>\n<\/div>\n\n\n\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\">\n<figure class=\"wp-block-embed is-type-wp-embed is-provider-tej wp-block-embed-tej\"><div class=\"wp-block-embed__wrapper\">\n<blockquote class=\"wp-embedded-content\" data-secret=\"nATcbNVrPI\"><a href=\"https:\/\/www.tejwin.com\/en\/insight\/what-is-treasury-stocks\/\">Treasury Stock: A Strategic Tool for Corporate Flexibility and Value Management<\/a><\/blockquote><iframe class=\"wp-embedded-content\" sandbox=\"allow-scripts\" security=\"restricted\" style=\"position: absolute; visibility: hidden;\" title=\"&#8220;Treasury Stock: A Strategic Tool for Corporate Flexibility and Value Management&#8221; &#8212; TEJ\" src=\"https:\/\/www.tejwin.com\/en\/insight\/what-is-treasury-stocks\/embed\/#?secret=1NfTb2ISX8#?secret=nATcbNVrPI\" data-secret=\"nATcbNVrPI\" width=\"600\" height=\"338\" frameborder=\"0\" marginwidth=\"0\" marginheight=\"0\" scrolling=\"no\"><\/iframe>\n<\/div><\/figure>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Seasoned Equity Offerings Are Not Just Fundraising \u2014They May Also Affect Market Confidence Seasoned equity offerings are a common way for listed companies to raise capital. When companies need funding, they may issue new shares to the market instead of relying only on bank loans or corporate bonds. The proceeds can be used for capacity [&hellip;]<\/p>\n","protected":false},"featured_media":16276,"template":"","tags":[3161,3038],"insight-category":[3646,3653],"class_list":["post-16275","insight","type-insight","status-publish","has-post-thumbnail","hentry","tag-corporate-events","tag-event-driven-data","insight-category-market-knowledge-data-guides","insight-category-quant-research"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.tejwin.com\/en\/wp-json\/wp\/v2\/insight\/16275","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.tejwin.com\/en\/wp-json\/wp\/v2\/insight"}],"about":[{"href":"https:\/\/www.tejwin.com\/en\/wp-json\/wp\/v2\/types\/insight"}],"version-history":[{"count":9,"href":"https:\/\/www.tejwin.com\/en\/wp-json\/wp\/v2\/insight\/16275\/revisions"}],"predecessor-version":[{"id":46249,"href":"https:\/\/www.tejwin.com\/en\/wp-json\/wp\/v2\/insight\/16275\/revisions\/46249"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.tejwin.com\/en\/wp-json\/wp\/v2\/media\/16276"}],"wp:attachment":[{"href":"https:\/\/www.tejwin.com\/en\/wp-json\/wp\/v2\/media?parent=16275"}],"wp:term":[{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.tejwin.com\/en\/wp-json\/wp\/v2\/tags?post=16275"},{"taxonomy":"insight-category","embeddable":true,"href":"https:\/\/www.tejwin.com\/en\/wp-json\/wp\/v2\/insight-category?post=16275"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}