Product Disclosure following Seasoned Equity Offerings

Work in Progress

Abstract

This study highlights the significance of product disclosure (PD) following seasoned equity offerings (SEOs) in indicating potential failure risks within the uncertain landscape of the innovation process. Employing a news-based dataset, we observe a substantial increase in PD relating to innovation progress post-SEO, in contrast to disclosures concerning new product introductions. Moreover, we find a negative association between post-issue operating performance and progress-type PD. These findings imply a tendency in equity markets to underestimate the failure risks associated with product innovation. The robustness of our results is maintained even after controlling for endogeneity concerns.

Keywords

Seasoned equity offerings, corporate innovation, product disclosure, investment financing

Seminars

National Chengchi University, National Central University