Stock Return Synchronicity and Seasoned Equity Offerings in China

We investigate what stock return synchronicity reflects by examining its effect on the pricing of seasoned equity offerings(SEO). Based on 1476 SEO from 2007 to 2014, we find a significantly negative relation between stock return synchronicity (estimated as the logit transformation of the R-squared statistic from a two-factor regression) and SEO discount (the percentage differences between pre-offer day closing prices and offer prices). This shows that information asymmetry can be mitigated by message cover. We use Eviews software to build the multiple linear regression model to make regression analysis. Secondly, the seasoned equity discount is found positive relationship with the stock system volatility. But we also find a negative relationship between the seasoned equity discount with volatility information, the issue price, the offer scale and shares outstanding.