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The last straw? Why Nordic firms issue equity – Empirical evidence from the Nordic stock markets
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School of Business |
Master's thesis
Electronic archive copy is available via Aalto Thesis Database.
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en
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47+5
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Abstract
This paper examines the determinants of seasoned equity offerings (SEOs) within the Nordic stock markets, assessing their alignment with prominent capital structure theories. Utilizing a dataset of 420 SEOs from 1,108 firms across 2010–2023, the analysis employs probit regressions to identify firm-specific ex-ante characteristics influencing the SEO decision, guided by trade-off, pecking order, and market timing theories. Furthermore, ex-post outcomes are analysed to evaluate consistency with theoretical predictions. The results reveal that capital demand, particularly proxied by capital expenditures and profitability, is the strongest predictor of SEOs, supporting the trade-off theory. Additionally, subsample analysis of firm age and analyst coverage indicate nuanced effects of information asymmetry. This thesis contributes to the literature by contextualizing capital structure theories within the Nordic region, offering novel insights into market dynamics and their implications for corporate finance strategies.