| From the experience of different capital markets, SEO ( seasoned equity offering ) is the most used refinancing tool. Lots of empirical researches have shown that SEO usually implies Bad News of corresponding company, that is, the negative effect of SEO. China's SEO started from 1998 and has experienced three stages: a) in 1998 and 1999, SEO was seen as Good News for corresponding company due to its close relationship with significant company restructure, b) from the second half of 2001 to the first half of 2002, SEO, instead, was seen as Bad News as a result of that more and more companies were qualified to issue SEO, which led to the slump of market price on the announcement of SEO. c) in the second half of 2002, SEO was once again applauded by the market as its qualification became more and more strict.What the reaction of A share market to SEO really is? Which factors have impact on such reaction? Does the 'Opportunity window' for SEO exist in China? To answer these questions, this paper firstly reviews international and national researches the market reaction and timing of SEO, then analyses the theories of SEO market reaction and puts forward hypotheses models. Based on which hypotheses are developed, this paper adopts econometric method to make a comprehensive and deep analysis for market reaction of SEO according to statistic data. Finally, this paper draws a conclusion that the timing of SEO in China doesn't follow the oversea theories and explains the reasons. In the end, three important revelations and advices on SEO in China are given.The innovative point of this paper lies in employing the Event Study method to research the reaction to SEO in three different time-points: Announcement day, issuance day, and listing day. From the perspective of market conditions, SEO regulations, this paper performed more systematic research than ever occurred in China. In the end, this paper gives the empirical analysis for SEO timing in China. |
