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The Associations between Brokers' Recommendations and Seasoned Equity Offerings
There are two topics for this project.Topic 1: Can Brokers' Recommendations Predict the Performance of Companies Conducting Seasoned Equity Offerings?AbstractThis study attempts to investigate the predictability of brokers' recommendations on the performance of companies conducting seasoned equity offerings (SEOs). We will work in two steps. First, we investigate the impacts of changes in brokers' recommendations around the announcements of SEOs on issuers' performance every half year (up to three years) following the SEOs. We argue that brokers' recommendations should have only short-run impacts on SEO companies' stock returns if analysts pursue their own benefits. On the other hand, brokers' recommendations should have predictability for the medium- or long-run performance of companies if analysts provide their professional opinions. Second, we examine the relations between changes in brokers' recommendations and company characteristics to infer how analysts evaluate SEO stocks. Specifically, we select company variables related to price momentum, the contrarian property (glamour and value stocks), and corporate investment.Topic 2: The Information Contents of Brokers' Recommendations prior to Seasoned Equity OfferingsAbstractThis study attempts to investigate the impacts of brokers' recommendations on (1) the announcement effect and (2) offer price decision of companies conducting seasonedequity offerings (SEOs). These two issues can help us to know more about the role of brokerage analysts in the secondary market and to explain the variations of SEO announcement returns and underpricing across companies. Empirically, we separate SEO companies into the upgraded, favorable, unfavorable, and downgraded, and no-recommendation groups, and identify whether brokers that provide recommendations are affiliated with issuers. We then examine the market reaction and underpricing of these groups. It is expected that companies with positive recommendations, especially for those from unaffiliated brokers, would have less negative announcement returns and more severe underpricing.2
經紀商推薦與現金增資的關聯性本研究共有兩個子題。子題一：經紀商的推薦可以預測現金增資公司的績效嗎？摘要本研究試圖調查 (美國) 經紀商在現金增資前後的推薦對公司績效之預測能力，本研究有兩個步驟，第一，調查經紀商的推薦與現金增資後每半年的買入持有報酬率的關係 (至多三年)，本研究認為，如果分析師只重視本身的利益，所提供的推薦對公司績效只有短期的預測能力，但分析師若提供專業且無偏頗的意見，則其提供的推薦對公司績效應有中長短期的預測能力。第二，本研究檢驗經紀商的推薦與公司特性的關係，以便推論分析師對現金增資公司的評估，本研究將選擇與價格動能、反向操作與公司投資相關的變數來進行分析。子題二：現金增資前經紀商推薦的資訊內涵摘要本研究試圖調查 (美國) 經紀商的推薦對公司現金增資 (1) 宣告效果及 (2) 承銷價格決策之影響，這兩個事項可以幫助我們瞭解經紀商分析師在次級市場中的角色，並可解釋現金增資宣告報酬率與承銷折價的變異性。實證上，本研究將增資公司區分為增資前調升、贊同、不贊同、調降及無推薦等組別，並分辨出經紀商是否具有關聯性，然後計算這些組別在增資時的宣告報酬率及折價程度。本研究預期，具有經紀商正向推薦的公司 (尤其是來自無關聯的經紀商)，增資宣告的報酬率下跌程度較低，承銷折價程度會較高。
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