The Impact of Hedge Funds on Equity Offerings

Abstract

Hedge funds are a small proportion of the overall investment market, but do they have a significant impact on the market? We hypothesize that hedge funds have reduced the volatility in the seasoned equity offering (SEO) market and also influence the daily returns surrounding the offering. In analyzing the volatility in stock prices surrounding SEOs and [sic] find that a greater number of hedge funds reduce the volatility in the market, while higher monthly hedge fund returns increase the volatility in the market.