earticle

영어

This study investigates the capital market reactions to announcements of seasoned equity offerings (SEOs), earnings management activities during the year before an SEO, and the decline in post-SEO stock performance. Although previous studies focus on the type of SEO and earnings management behavior, we classify SEO firms into two subsamples, those in which the largest shareholders increase their shareholding ratio and those in which they decrease their shareholding ratio, to examine management incentives that protect the wealth of existing shareholders. The announcement of an SEO in which the largest shareholders participate is good news for the market. We first seek to examine whether the response of the capital market to an SEO in which the largest shareholder’s shareholding ratio increases is more positive than its response to an SEO in which the largest shareholder’s shareholding ratio decreases. Because the cash flow of an SEO is dependent on the stock price, the management has an incentive to temporarily raise the stock price to maximize the existing shareholders’ wealth in SEO cases where the largest shareholder’s shareholding ratio decreases. Therefore, our second hypothesis is that there is greater earnings management, involving increased reported earnings, in the year before an SEO in which the largest shareholder’s shareholding ratio increases than an SEO in which it decreases. The decline in post-SEO stock performance in cases where the largest shareholder’s shareholding ratio decreases is more severe than in cases where it increases, because post-SEO performance is driven by accrual reversal. Therefore, our third hypothesis is that there is higher post-SEO stock performance in cases where the largest shareholder’s shareholding ratio increases than in cases where it decreases. The empirical results of this study are as follows. First, the cumulative abnormal returns (CAR) around the announcement date of SEOs in which the largest shareholders’ shareholding ratio increases is higher than the CAR around those in which the ratio decreases. This provides support for our first hypothesis that the capital market responds more positively to SEOs in which the largest shareholder’s shareholding ratio increases than to SEOs in which the ratio decreases. Second, the relationship between discretionary accruals during the year before an SEO and the change in the largest shareholder’s shareholding ratio is negative. This is consistent with our second hypothesis that there is more earnings management to increase reported earnings during the year before SEOs in which the largest shareholder’s shareholding ratio decreases than SEOs in which the ratio increases. Third, the relationship between the three-month buy and hold abnormal returns of SEOs and the change in the largest shareholders’ shareholding ratio is positive. This partially supports our third hypothesis that there is higher post-SEO stock performance in cases where the largest shareholder’s shareholding ratio increases than in cases where the ratio decreases. Overall, our findings show that the greater the change in the largest shareholder’s shareholding ratio, the more positive the capital market reaction to the SEO announcement, the less the earnings management, and the higher the post-SEO stock performance. The results can be explained as the incentive of management to protect the wealth of existing shareholders. We make several contributions to the literature. First, we investigate SEOs by classifying SEO firms into two subsamples, those in which the largest shareholders increase their shareholding ratio and those in which they decrease their ratio, to examine management incentives to protect the wealth of existing shareholders. Our study differs from others in the literature, which focus on the type of SEO and earnings management behavior or market responses to SEOs. Classifying firms by the change in the largest shareholder’s shareholding ratio is a more feasible way to examine management incentives to protect the wealth of existing shareholders than classifying them by the type of SEO, because the type of SEO is associated with the participation of existing shareholders. For example, in the case of a general cash offer, the largest shareholder can either participate in an SEO or not, or stand by the rights offer because there are no mandatory regulations. The largest shareholders can increase their shareholding ratio through third party allocation in cases where the third party is the largest shareholder. Our results showing that the largest shareholder’s shareholding ratio increases through SEOs in the Korean capital market explains why the positive market response to the announcement of SEOs in Korea is different from the negative market response in other countries.

한국어

본 연구에서는 유상증자를 대주주의 지분율 증감 여부로 구분하여 유상증자 공시에 대한 시장 반응 및 유상증자 전 이익조정, 유상증자 후 장기 수익률에 대해 실증 분석하였다. 기존주주의 부를 보호하려는 경영자의 유인을 유상증자에 적용하여 유상증자를 유형에 따라서 구분하여 연구한 선행연구와 차별화 하였다. 본 연구의 실증 분석 결과를 요약하면 다음과 같다. 첫째, 대주주의 지분율이 증가하는 유상증자를 실시한 기업의 유상증자 공시일 전후의 누적초과수익률(CAR)은 대주주의 지분율이 감소하는 유상증자를 실시한 기업의 누적초과수익률보다 높게 나타났다. 둘째, 유상증자를 실시한 기업의 유상증자 실시 직전년도의 이익조정은 대주주 지분율의 증감과 유의한 음(-)의 관계로 나타났다. 마지막으로, 대주주의 지분율이 증가하는 유상증자를 실시한 기업의 유상증자 후 3개월간의 매입보유초과수익률(BHAR)이 대주주 지분율의 증감과 유의한 양(+)의 관계로 나타났다. 이러한 결과는 경영자가 기존 주주의 부를 보호하기 위해 대주주의 참여가 낮을수록 신규주주를 대상으로 신주의 발행가격을 높이기 위해 이익조정을 더 많이 하고, 대주주 지분율 증감에 따라 유상증자 공시에 대한 시장반응 및 장기 수익률이 차별적으로 나타난다는 것을 보여준다. 따라서 국내 시장의 유상증자 공시에 대한 긍정적인 반응은 유상증자를 통해 평균적으로 대주주 지분율이 증가하기 때문이며 대주주 지분율이 감소하는 유상증자의 부정적인 시장반응과 장기 저성과를 제시함으로써 증자에 참여하는 투자자의 의사결정에 시사점을 던져준다.