Market Timing and Ownership Structure in SEOs

This paper examines whether ownership structure moderates the relationship between market-timing incentives and the likelihood of seasoned equity offerings (SEOs). Using a panel of Australian listed firms and logit specifications, market-timing incentives are proxied by market-to-book ratios and pre-issue abnormal returns, while ownership structure is measured by the largest shareholder’s stake and institutional ownership. The results show that the positive association between market-timing proxies and SEO likelihood is weaker when ownership is more concentrated in the hands of the largest shareholder. Institutional ownership, by contrast, does not exhibit a robust moderating effect. These findings suggest that concentrated ownership may reduce firms’ sensitivity to market-timing signals, contrary to the initial expectation that large shareholders have stronger incentives to exploit overvaluation.