The pricing of global versus domestic seasoned equity offers

This study investigates the pricing behavior of global seasoned equity offers by US industrial companies. We find that, though the offer price is set substantially below the last trade price for both global and domestic offers, global offers experience significantly lower offer price discounts. Global offers also suffer smaller price declines during the entire offering interval that starts from 1 day prior to filing and ends 1 day after the offer. These results are consistent with the notion that demand for securities is not perfectly elastic and hence allocating a sizeable portion of total shares to overseas investors relieves the price pressure exerted in the domestic market, leading to a higher equilibrium price.