The Impact of Financial Constraint and Default Risk on the Operating Performance after SEOs

• Main Authors: Mei-Ling Lin, 林美伶
• Other Authors: 楊東曉
• Format: Others
• Language: zh-TW
• Published: 2012
• Online Access: http://ndltd.ncl.edu.tw/handle/73765636596471931337

碩士 === 國立中興大學 === 財務金融系所 === 100 === The existing literature has documented that the operating performance of issuing firms, which conducting seasoned equity offerings, shows substantial improvement prior to the offering but then deteriorates afterward. In addition, there are many financial crisis and bankruptcy events that lead to strong shocks in economy recently. Therefore, this study links financial constraint and default risk with seasoned equity offerings. We investigate the impact of financial constraint and default risk on long-run operating performance after SEOs. To analyze the impact thoughtfully, we use six financial ratios as proxies for operating performance, KZ-index for financial constraint, and Z-Score for default risk. We also use multiple regressions to test the determinant of the abnormal ROA. The issuing firms are between 1990 and 2006. The empirical results show that issuing firms with high financial constraint and low default risk perform better than other issuing firms. Additionally, abnormal ROA has significantly positive relation with the interaction between high KZ and low Z-Score.