Abstract

Purpose – We are the first to investigate the relationship between seasoned equity offerings (SEOs) and anchoring on historical high prices in China.

Design/methodology/approach – We use the ratio of the recent closing price to its historical high in the previous 12–60 months (anchoring-high-price ratio) to study its impact on the market timing of SEOs.

Findings – Empirical results show that the anchoring-high-price ratio significantly and positively affects the probability of additional stock issuances. Contrary to the USA market, the Chinese stock market reacts negatively to the SEOs at historical highs. Moreover, the anchoring-high-price ratio exacerbates the negative effect of announcements and leads to long-term underperformance. Finally, we investigate the impact of the anchoring-high-price ratio on a company’s capital structure, showing that the additional issuance anchoring on historical highs reduces the company’s leverage ratio in the long run. Overall, our findings support the anchoring theory and can help understand better the anchoring behavior of managers and the company’s decision on additional stock issuances.

Originality/value – We are the first to use the anchoring-high-price ratio to study the timing of SEOs. We find that the anchoring-high-priceratio positively affects the probability of SEOs. Unlike the USA, the Chinese stock market reacts negatively to SEOs at high prices. SEOs anchoring on historical highs reduce a firm’s leverage ratio in the long run. Finally, our results support the anchoring theory.

In recent years, digital agricultural technology extension services (DATES), leveraging Internet platforms such as WeChat official accounts and mobile applications, have gained popularity, providing a new pathway for agricultural technology dissemination. This service overcomes the temporal and spatial limitations of traditional agricultural technology extension, enabling farmers to conveniently access planting knowledge. Then, can DATES effectively encourage farmers to adopt OMF and contribute to the green transformation of agriculture? Professor Minjuan Zhao from the College of Economics and Management, Northwest A&F University, and her team addressed this question through a survey of farmers in major apple - producing areas in China. The related research has been published in Frontiers of Agricultural Science and Engineering (DOI: 10.15302/J-FASE-2024590).