Equity issues and the impact of lead manager affiliation on broker market share and trading volume

• This paper studies broker trading activities in SEOs in Australian market.
• The findings provide insights of key factors that influence a broker's market share.
• Broker affiliation positively impact on broker performance in SEOs.
• Lead managers or co-managers do not outperform other underwriters in brokerage market share around SEOs.
• Reputation, firm size and offer size are key factors affecting broker performance.

This paper studies the trading volume and market share of brokers around seasoned equity offerings (SEOs) in the Australian equity market based on a unique broker ID dataset. We examine the drivers behind the behaviour of affiliated and unaffiliated brokers around SEOs. The findings contribute to the understanding of how broker affiliation impact SEO trading activity. Results show that SEO affiliation is positively related to broker trading volume and market share on both the announcement day and issuance day. However, there is no evidence suggesting that lead managers or co-manager generate additional trading volume compared to other co-underwriters. Broker reputation, market capitalization and relative SEO size of the offering firm are shown as the primary determinants influencing broker trading activity.