Determinants of Capital Market Reactions to Seasoned Equity Offers by German Corporations

Our study provides evidence on the share price reactions to the announcement of equity issues inGermany, where capital market is characterized by institutional features distinct from the U.S. market.German seasoned equity issues yield a positive market reaction which contrasts to the significant negativeabnormal returns reported for the U.S. We provide evidence that these results are due to differences inboth issuing characteristics and floatation methods, and in the corporate governance and ownershipstructures of the two countries. Our study explains much of the empirical puzzle of different marketreactions to seemingly similar events across financial markets.