The Strategic Decisions of Large Shareholder under Seasoned Equity Offering

This paper analyzes the strategies of owning the new stocks and monitoring the objective company. Under a case of seasoned equity offering, the large shareholders may be diluted; as a result they may consider participating the season equity offering, which is buying some new stocks. However, the large shareholders own more stocks, and the market is less liquid. Since the large shareholders cannot enjoy a trading profit in an illiquid stock market, they might not like to have too many new stocks of the objective company.