Effects of company size and issue method on the price performance of the stocks issued through seasoned equity offerings for long and short term: Evidence from Borsa İstanbul

The main objective of this study is to determine the short and long term price performance of the stocks issued by the companies through seasoned equity offerings for the period of 2010-2015 in Borsa İstanbul and find out determinant factors on the short and long term price anomalies. In the study, in order to evaluate price performance of stocks, short-term underpricing anomaly and long-term underperformance anomaly were examined. According to the t-test results based on adjusted returns of equities, the short term underpricing anomaly can not be fully confirmed in Borsa Istanbul during the analysis period. It has been confirmed statistically only in 2011 and 2015 years and in the stocks of industrial sector. In other words, it is possible for investors to obtain abnormal returns in the short term if they purchase shares from the seasoned equity offerings for 2011 and 2015 carried out by companies in the industry sector. Long-term underperformance anomaly has been confirmed for all years and all sectoral basis analysis during the review period. Through the buy and hold investment strategy metodology, we observed that the returns of the investors bought stocks and hold them for the 36 months have a significiantly lower returns when compared to market returns (Bist 100 index) and peer group companies that match sample firms in terms of asset size and M/B ratio. Also based on the findings of long term analysis, returns of investors for the long – run has been observed as negative. Obtained findings statistically significant and consistent with the results in previous literature. In addition to this, in the study the determinants of price performance of stocks were analyzed both for the short and long term. Panel regression analysis was conducted in order to find out effect of selected variables. Determinants that considered as independent variables in study include; Stock Price, Number of Public Offerings, Company Size, Public Offering Method, Transaction Volume, Difference, Leverage Ratio, Capital Increase Rate, M / B ratio and Volatility. For all time periods of the short term; we observed that the variables cover leverage ratio change, capital increase rate and the capital increase performed without restriction of subscription rights (public placement) have positive effect on share price performance while other variables such as M / B ratio and capital increase in the form of private offerings (private placement) have a negative impact. The other variables have positive or negative effect depending on the selected short-term time period. In the long run; the effect of variables like the leverage ratio change, capital increase in the form of private offerings (private placement) and transaction volume have a positive effect on the share price performance whereas the effect of the other variables on the share price performance is negative. Keywords : Initial Public Offering (IPO), Seasoned Equity Offerings (SEO), Underpricing, Underperformance, Price Anomalies.