Heterogeneous beliefs and return volatility around seasoned equity offerings

Ann Marie Hibbert, Qiang Kang, Alok Kumar, Suchi Mishra

Research output: Contribution to journalArticlepeer-review


We investigate the dynamics of heterogeneous beliefs and link them to the volatility pattern throughout the seasoned equity offering (SEO) event window. In sync with a reduction in information asymmetry related to management information releases around the SEO event, belief heterogeneity declines. Moreover, heterogeneity in beliefs, proxied by either analyst- or institutional-trade-based measures, is a robust and salient determinant of SEO firm volatility, which provides an explanation for the volatility timing “puzzle” identified in the SEO market. Furthermore, the relation between heterogeneous beliefs and return volatility weakens as short sale constraints tighten, suggesting a potential causal link.

Original languageEnglish (US)
JournalJournal of Financial Economics
StateAccepted/In press - 2020


  • Analyst forecast dispersion
  • Return volatility
  • SEOs
  • Short selling
  • Trade-based heterogeneity in beliefs

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics
  • Strategy and Management


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