TY - JOUR
T1 - Sunshine-induced mood and SEO pricing
T2 - Evidence from detailed investor bids in SEO auctions
AU - Sun, Qian
AU - Cheng, Xiaoke
AU - Gao, Shenghao
AU - Chen, Tao
AU - Liu, Jia
N1 - Funding Information:
The paper has benefited greatly from valuable comments and suggestions of anonymous referees and the editor (Tracy Wang). Xiaoke Cheng acknowledges financial support from the National Natural Science Foundation of China (No. 72272008, No. 71872010). Tao Chen acknowledges financial support from the Multi-Year Research Grant (MYRG2020-00042-FBA, MYRG2022-00008-FBA) at the University of Macau.
Publisher Copyright:
© 2023 Elsevier B.V.
PY - 2023/6/1
Y1 - 2023/6/1
N2 - We examine sunshine-induced mood and its impacts on investors' bidding decisions in the primary market where seasoned equities are offered. Analyzing a unique database that records seasoned equity offerings (SEOs) investors' locations, identities, and bidding information, we examine the degree to which sunshine exerts an influence on investors' bidding behaviors (and subsequently SEO discounts) from two dimensions: sunshine intensity and duration. We find that investors exposed to stronger sunshine intensity or longer sunshine duration submit a higher bid price for SEOs, thus leading to lower offer discounts. We also find that mood misattribution and risk-taking act as channels to rationalize such a sunshine effect. Our moderating analyses indicate that the documented impact strengthens in the case of greater uncertainty, less-frequent bidders, retail investors, and lower levels of investment. These sunshine effects impact failed bids, SEO participation and SEOs' long-term performance. Our study provides original evidence that investors in the primary market can be influenced by a sunshine-induced mood, which, in turn, determines the cost of equity financing.
AB - We examine sunshine-induced mood and its impacts on investors' bidding decisions in the primary market where seasoned equities are offered. Analyzing a unique database that records seasoned equity offerings (SEOs) investors' locations, identities, and bidding information, we examine the degree to which sunshine exerts an influence on investors' bidding behaviors (and subsequently SEO discounts) from two dimensions: sunshine intensity and duration. We find that investors exposed to stronger sunshine intensity or longer sunshine duration submit a higher bid price for SEOs, thus leading to lower offer discounts. We also find that mood misattribution and risk-taking act as channels to rationalize such a sunshine effect. Our moderating analyses indicate that the documented impact strengthens in the case of greater uncertainty, less-frequent bidders, retail investors, and lower levels of investment. These sunshine effects impact failed bids, SEO participation and SEOs' long-term performance. Our study provides original evidence that investors in the primary market can be influenced by a sunshine-induced mood, which, in turn, determines the cost of equity financing.
KW - Bidding decisions
KW - Climate change
KW - Mood
KW - SEO discounts
KW - Sunshine
UR - http://www.scopus.com/inward/record.url?scp=85153107719&partnerID=8YFLogxK
U2 - 10.1016/j.jcorpfin.2023.102411
DO - 10.1016/j.jcorpfin.2023.102411
M3 - Article
AN - SCOPUS:85153107719
SN - 0929-1199
VL - 80
JO - Journal of Corporate Finance
JF - Journal of Corporate Finance
M1 - 102411
ER -