Registered secondary offering

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Registered secondary offering

A reoffering of a large block of securities, previously publicly issued, by the holder of a large portion of some corporation through an investment firm.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Registered Secondary Offering

An offering of a large block of previously issued stock that is not usually traded after registering the offering with the SEC. For example, a mutual fund that owns a large portion of an issue of stock may decide to sell it. Most of the time, the seller of a registered secondary offering is an institutional investor who acquired the stock through private placement. It is also called a registered secondary distribution. See also: Overnight deal.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
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This price response is less than that documented by Mikkelson and Partch |5~ of -1.96% for nonregistered secondary offerings and -2.87% for registered secondary offerings. I argue the negative price response in the convert's stock is a result of information brought to the market regarding the convert's stock by the announcement of the exchangeable debt issue and is smaller in magnitude than the negative abnormal price response observed on the announcement of the sale of a block of equity by an informed party because of the repurchase guarantee implicit in exchangeable debt.
Significantly, this price response is less than the -1.96% abnormal price response for nonregistered secondary offerings and -2.87% abnormal price response for registered secondary offerings documented by Mikkelson and Partch |5~.
8 Mikkelson and Partch |5~ document that 37% of the 146 registered secondary offerings which they analyze were offered by directors and officers of the corporation who are arguably better informed than an outside corporation, while 63% of the registered secondary offerings were made by individuals, corporations, financial service companies, or trusts.
Mikkelson and Partch |5~ document the median underwriting costs of a registered secondary offering as 4.7% of the offering value in a sample of 146 registered offerings.
Exchangeable debt

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