Thi Xuan Dung NGUYEN

Defense

31, May 2024

Saint-Martin-d'Hères - University Campus

Liquidity, Information Risk, and Corporate Financing Decisions

Composition of the Jury

Radu BURLACU	Université Grenoble Alpes	Thesis Advisor
Sonia JIMENEZ-GARCES	Université Grenoble Alpes	Co-advisor for a doctoral thesis
Jean-François GAJEWSKI	Jean Moulin University of Lyon 3	Rapporteur
Pascal GRANDIN	University of Lille	Rapporteur
Carole BERNARD	Grenoble School of Management	Examiner
Ollivier TARAMASCO	Université Grenoble Alpes	Examiner

Abstract

This dissertation examines the interactions among three financial issues related to both financial markets and corporate finance: liquidity, information risk, and corporate financing decisions. This dissertation aims to clarify the bidirectional relationship between the market and corporate financing decisions. The analysis is based on a sample of firms that conducted Seasoned Equity Offerings (SEOs) in European countries with different formal and informal institutional frameworks between 2000 and 2020.

The first chapter of this dissertation, titled “Stock Price Informativeness and the Impact of Seasoned Equity Offerings on Liquidity,” examines the effect of SEOs on a firm’s stock liquidity and whether this effect is determined by the informativeness of the stock price. We find that liquidity improves significantly following a seasoned equity offering, and that this improvement is positively and significantly related to the informativeness of the stock price during the period preceding the offering. Our study demonstrates the importance of the information factor as a determinant of improved liquidity of a firm’s shares during seasoned equity offerings.

The second paper, titled "SEO Underpricing, After-SEO Returns, and the Probability of Follow-On Equity and Debt Offerings," examines the relationship between a firm's SEO and equity and debt offerings associated with SEO underpricing and post-SEO returns. Our results support the “IPO underpricing signaling” and “market feedback” hypotheses in the case of repeated IPOs. These findings add value to the existing literature, which tends to analyze these hypotheses primarily in the context of initial public offerings (IPOs) and subsequent equity offerings. More specifically, we show that the probability of a subsequent IPO increases with the undervaluation of the previous IPO and post-IPO returns. With regard to subsequent debt issuance, we find a negative impact of IPO undervaluation, but no impact of post-IPO returns on the probability of subsequent debt issuance. Similarly, the preference for debt over equity as a source of subsequent financing decreases with the extent of the IPO’s undervaluation and is not related to post-IPO returns.

The third study, titled "Stock Price Informativeness, Liquidity, and the Firm's Subsequent Financing Choices Following a Seasoned Equity Offering," further examines whether subsequent financing decisions are influenced by stock price informativeness and liquidity following a seasoned equity offering. In particular, we examine and compare the impact of stock price information and liquidity (in terms of both level and variation) following an SEO on the probability of equity and debt issuances occurring in the following three years (while controlling for the effects of SEO undervaluation and post-SEO returns). Our results show that information on stock prices and liquidity differently influences subsequent financing decisions over the next three years. The level of information on stock prices following an IPO increases the probability of a new IPO but decreases the probability of a new debt issuance. At the same time, post-IPO liquidity increases the probability of both new debt and equity issuances, as more liquid firms favor debt financing over equity financing. Post-IPO equity liquidity appears to be more important than stock price information in explaining a firm’s subsequent financing choices.

Date

31, May 2024

Location

Saint-Martin-d'Hères - University Campus

CERAG - Ground Floor Room

150 Rue de la Chimie