Tunde Kovacs

• University of Massachusetts Lowell

Confidentially marketed public offers (CMPOs) represent a popular innovation in the market for seasoned equity offers (SEO) despite large negative announcement reactions. We find that CMPOs are often used by small firms with negative operating cash flows to raise a relatively substantial amount of capital, which is used largely for R&D intensive in...

We test the hypothesis that underwriters set higher gross spreads and deeper offer price discounts in seasoned equity offers of firms exhibiting weak shareholder rights as compensation for increased reputational risk and legal liability. Alternatively, if market participants are fully aware of the risks related to weak shareholder rights and effici...

We find that seasoned equity issuers who pay more in underwriting costs are associated with larger improvements in investor recognition, greater contemporaneous increases in firm value, and larger declines in illiquidity risk. We identify increased analyst following as an important channel through which these effects occur. The results are consiste...

This paper presents evidence suggesting that CEO connections facilitate investments in corporate innovation. We find that firms with better-connected CEOs invest more in R&D and receive more and higher quality patents. Further tests suggest that this effect stems from two characteristics of personal networks that alleviate CEO risk aversion in corp...

We find that analysts who frequently revise their stock recommendations outperform those who do not. This result holds for portfolios formed on the basis of favorable changes in recommendations as well as unfavorable changes. The frequency of revision captures information incremental to factors known to identify superior recommendations. Although m...

This study examines the role of intra-industry information transfers in the post-earnings announcement drift. I find that subsequent same-industry peer earnings announcements strongly influence a firm's post-earnings announcement drift. The post-earnings drift is present only when subsequently arriving same-industry peer earnings announcements conf...

This study examines the cross-sectional impact of the 2008 short sale ban on the returns of US financial stocks. Motivated by the large cross-sectional variation in the extent to which banned stocks suffer an illiquidity shock, we hypothesize that stocks with larger liquidity declines are associated with poorer contemporaneous stock returns. The ev...

We investigate the intertemporal relation between information asymmetry and equity issues, and particularly focus on which firms drive this relation. We find that when information asymmetry for a particular firm is low compared to the recent past, the firm is more likely to issue equity as opposed to debt. Importantly, this intertemporal associatio...

A series of deregulatory reforms have promoted accelerated equity issuance at the expense of adequate time for underwriter and market scrutiny. Today the majority of publicly listed companies can raise equity on a moment’s notice, but many eligible issuers choose to allow additional time for scrutiny. We hypothesize that issuers with less favorable...

We examine whether sell-side analyst recommendations reflect shareholder rights. Our rationale is that analysts should be influenced by external governance only if market participants do not efficiently price its value. We find that stronger shareholder rights are associated with more favorable recommendations. Further analysis reveals that analyst...

This work studies an organizational form phenomenon for which agency explanations are problematic. A recent demutualization wave in the US life insurance industry offers an opportunity to identify determinants of organizational form outside the traditional area of agency costs. Analysis and empirical evidence indicate that innovations in the produc...

The extensive use of equity financing in the 1990s is in sharp contrast to the prediction of Myers and Majluf's (1984) pecking order theory that debt issues strictly dominate equity issues. We provide evidence in favor of a multi-period pecking order [Viswanath (1993)], in which time-varying adverse selection costs can make equity issues optimal (e...

I examine the role of product market relations in information assimilation surrounding corporate earnings announcements. I provide evidence that intra-industry information transfers measured by industry rival earnings announcements account for a substantial portion of the well documented post-earnings announcement drift. While this evidence appears...