Corporate governance and long run performance of seasoned equity issuers

Wassim Dbouk, Ahmad Ismail

    Research output: Contribution to journalArticlepeer-review

    2 Citations (Scopus)


    This paper examines the effect of corporate governance on the likelihood of issuing Seasoned Equity Offerings (SEO) between 1990 and 2005. It also examines the long-run post-issue performance using operating and stock return measures. Our results suggest that well-governed firms are less likely to issue equity. Nevertheless, when they do so, they outperform both matching non-issuers and issuers with minimal shareholders' rights from pre- to post-issue-with the highest operating out-performance occurring in the two post-issue years. A negative correlation exists between the post-issue performance and the anti-takeover measures, primarily, the protection associated with management entrenchment. Nonetheless, measures of board structure do not appear to affect the post-issue operating performance. Overall, corporate governance appears to be an effective internal control mechanism that restrains managers' incentives to either take an SEO issuance decision that does not serve the interests of shareholders or invest the capital raised in value-destroying projects.

    Original languageEnglish
    Pages (from-to)159-177
    Number of pages19
    JournalJournal of Multinational Financial Management
    Issue number4-5
    Publication statusPublished - Dec 2010


    • Corporate governance
    • Long-run
    • Operating performance
    • Seasoned equity offers

    ASJC Scopus subject areas

    • Finance
    • Economics and Econometrics


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