Ch. 6: Security Offerings 271
Ta b l e 7
(Continued)Study Sample period Explanatory variable Sign
Recent SEO activity (prior 3 months) +
Inverse of offer size +
(offer size)
Kim, Palia, and Saunders (2005a) 1970–2000 Underpricing estimate +
Missed financial statement +
Lead underwriter not in top 25 +
Issuer leverage +
Stock return standard deviation +
Over-allotment option used +
Inverse log(offer size) +
Market cap∗Inverse log(offer size) −
Herfindahl index in I-banking −
Lead underwriters market share −
Commercial bank market entry −
Issuer profitability −
Butler, Grullon, and Weston (2005a) 1993–2000 Bid–ask spread (%) +
Log(stock return standard deviation) +
Amex indicator +
Nasdax indicator +
Quoted depth −
Trading volume −
Issuer share turnover −
Log(offer size) −
Log(equity capitalization) −
Log(share offer price) −
Multiple syndicate book managers −
Lee and Masulis (2006) 1991–2002 Poor accrual quality +
Stock return standard deviation +
Relative offer size +
Shelf offering −
Log(offer size) −
Underwriter market share −
Log(total assets) −
Drucker and Puri (1989) 1996–2001 Inverse of offer size +
Stock return standard deviation +
Concurrent lending −
Concurrent and prior lending −
Prior lending −
Prior equity underwriter −
SEO market activity −At the same time, SEO underwriting spreads are negatively related to offer size, is-
suer profitability, market depth, equity capitalization, share price, average shareholding
value, market share of top 25 underwriter, commercial bank entry in the underwriting
market, and multiple book managers.