Underwriter Certification and Japanese Seasoned Equity Issues

John W. Cooney, Hideaki Kiyoshi Kato, James S. Schallheim

Research output: Contribution to journalArticlepeer-review

23 Scopus citations


In sharp contrast to results in the United States, the average stock price response to an announcement of a seasoned equity issue in Japan is positive. Offer prices in Japan, unlike the United States, are announced several days before the beginning of the subscription period and incorporate a substantial discount. We suggest that the positive announcement effects in Japan are consistent with the underwriter's certification of the issuing firm's value. We characterize the underwriter's risk as a put option and find a positive association between the underwriter's risk and the announcement returns, as well as other results consistent with underwriter certification.

Original languageEnglish
Pages (from-to)949-982
Number of pages34
JournalReview of Financial Studies
Issue number3
StatePublished - 2003


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