Corporate Social Responsibility and the Pricing of Seasoned Equity Offerings: Does Executive Firm-Related Wealth Matter?
- Hong Chuong PHAM Duc Anh NGO Ha Thanh LE Thiet Thanh NGUYEN
- The Journal of Asian Finance, Economics and Business(JAFEB)
- Vol. 7 No.8
- 등재여부 : KCI등재
- 297 - 308 (12 pages)
This study exemines the roles of corporate social activity (CSR) and executive compensation structure on the pricing of seasoned equity offerings (SEOs) with special focus on the role of CSR in reducing the level of information asymmetry between managers and future shareholders of issuing firms through SEOs. This study also investigates the interaction between executive compensation structure and CSR on the discounting of SEOs. We use a sample of 2,102 seasoned equity offerings of U.S. firms with CSR scores from 1995 to 2015 in our OLS fixed effect regression analysis. The results show that issuing firms with high CSR are more likely to expericence a lower degree of the SEO discount. The results also document a positive association between CSR and a high proportion of equity-based compensation of issuing firms’ executives. The findings of this paper confirm that CSR attenuates the impact of information asymmetry and the pre-SEO price uncertainty on the pricing of the offers and hence the SEO discount. Furthermore;CSR reinforces the impact of executive firmrelated wealth on the discounting of seasoned equity offerings. It appears that firm-related wealth motivates managers to actively engage in reducing information asymmetry activities before SEOs;thereby decreasing the SEO discount.
2. Literature Review and Hypotheses
3. Data and Research Methods
4. Empirical Results