Abstract
We examine the impact of unsolicited credit ratings on seasoned equity offering (SEO) under pricing in China using issuer credit rating data of listed companies on the Shanghai and Shenzhen stock exchanges for the period 2002 to 2009. Our findings suggest that, after controlling for other factors, a SEO firm in china with a credit rating is able to reduce its SEO under pricing, on average, by 13.26% to 15.80%. In addition, the under pricing of an SEO firm that receives a speculative-grade credit rating is not significantly different from an SEO firm with an investment-grade rating. Thus, SEO firms appear to benefit from receiving an unsolicited rating. In general, credit ratings reduce information asymmetry and hence leave less money on the table when raising capital. This may lead firms to actively solicit credit ratings
in the future, especially those who plan to access the capital markets.
in the future, especially those who plan to access the capital markets.
| Original language | English |
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| Publication status | Published - Jun 2012 |
| Event | The 19th Annual Conference of the Multinational Finance Society - Poland, Krakow, Poland Duration: 24 Jun 2012 → 27 Jun 2012 http://www.mfsociety.org/page.php?pageID=179 |
Conference
| Conference | The 19th Annual Conference of the Multinational Finance Society |
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| Country/Territory | Poland |
| City | Krakow |
| Period | 24/06/12 → 27/06/12 |
| Other | Multinational Finance Society |
| Internet address |