Topic: The Role of Financial Intermediaries
in the Transmission of Peer-to-Peer Financial Policies
Speaker: Matthew T. Billett, Professor in Finance, Kelley School of Business, Indiana University
Date: March 2nd (Wednesday)
Time: 2:30pm-4:00pm
Location: Building 4, Room 101
Language: English
Abstract:
We document
a significant influence of industry peers’ recent equity issuance, on the SEO
activity of financially constrained firms. This effect is incremental to prior
determinants of SEO decisions. We explore the role of financial intermediaries
in the transmission of these peer effects and find that analyst coverage and
institutional ownership increase, and analyst forecast dispersion and bid-ask
spreads decrease following peer firm SEOs. We find that a constrained firm’s hazard
ratio of an SEO increases in the number of recent peer firm SEOs, and that this
relation is particularly strong when the peer SEOs are marketed by the firm’s
own underwriter. When the constrained firm announces an SEO we find the
announcement returns increase and the gross spreads decrease when their
underwriter has recently done related deals. Our results suggest that financial
intermediaries are important information conduits from earlier issuers to their
industry peers.
About the speaker:
Matthew T. Billett holds the Richard E. Jacobs Chair
in Finance at the Kelley School of Business, Indiana University. Previously,
Professor Billett spent thirteen years in the Tippie College of Business,
University of Lowa. He received a Ph.D. in Finance from the University of Florida
in 1993. Professor Billett has articles published in the Journal of Financial and Quantitative Analysis, Journal of Finance, Financial
Management, the Journal of Financial Economics, and the Review of Financial
Studies, among others. Professor Billett is also an associate editor of the Journal of Financial Research.
