Ritter's study of SEO's suggests that:
A)managers appear to be able to successfully time SEO issues when the stock is overpriced.
B)managers can only successfully time SEO issuance by pure chance.
C)managers tend to be incorrect in their market assessment of the market movement of their firm's stock price.
D)returns on SEO-issuing firms are statistically the same as those of style-matched non-issuers for the five years following issuance.
E)firms are better at timing IPOs than they are at timing SEOs.

Question

Quizplus · Accepted Answer

DRitter's study on SEOs (Seasoned Equity Offerings) suggests that managers appear to be able to time SEO issues when the stock is overpriced, indicating they can take advantage of market conditions to benefit the firm. Additionally, the study finds that returns on SEO-issuing firms are statistically the same as those of style-matched non-issuers for the five years following issuance, suggesting that the market adjusts to the new equity issuance over time, and the long-term performance of these firms does not significantly differ from their peers.

Ritter's Study of SEO's Suggests That