Differences Between Seo And Ipo

Differences between seo and ipo

What is the difference between and IPO and a direct listing? Yahoo Finance explains

We use hand‐collected data on the management quality of firms making seasoned equity offerings (SEOs) or initial public offerings (IPOs) to analyze the relationship between management quality and equity issue characteristics, and to compare the effect of management quality on SEOs versus IPOs. We hypothesize that higher quality managers are more credible to equity market investors, thereby reducing the information asymmetry they face in the market and outsiders’ information production costs.

Differences between seo and ipo

Therefore, the equity issues of higher management quality firms will have more reputable underwriters, smaller underwriting spreads, and other expenses, and smaller SEO discounts.

Further, since better managers will be able to select better projects, higher management quality firms will have larger offer sizes.

Difference Between SEO and SEM

Finally, since SEO firms are likely to suffer from less information asymmetry compared to IPO firms, these effects will be smaller for SEOs than for IPOs.

Our findings support the above hypotheses.

Differences between seo and ipo

Our direct tests of the relationship between management quality and information asymmetry, and our comparison of information asymmetry in SEOs versus IPOs provide further support for these hypotheses.